- Flat Rate (employment) expenses
- Round sum expenses
- Meal allowances
- Re-imbursement of allowable expenses
- Motoring expenses
- Subsistence allowances
- Reference Material
Flat Rate (employment) expenses
These are expenses that are incurred in the performance of the duties of the employment and are directly related to the 'nature of the employee's employment'. A standard flat rate expenses allowance (deduction) is set for various classes of employee. For example, driving instructors are granted flat rate expenses of €125 per annum. See Flat Rate Expenses list (MS Excel, 64KB) The amount of the deduction is agreed between Revenue and representatives of groups or classes of employees (usually the employees are represented by trade union officials). The agreed deduction is then applied to all employees of the class or group in question.
Round sum expenses
Round-sum expenses payments (lump sum expenses payments) whether paid weekly, monthly, yearly or otherwise, which are paid to the employee to cover expenses, must be treated as pay and taxed accordingly. An example of a round sum payment is where an employer agrees to pay, say €300 per month in addition to basic salary in order to cover expenses. This €300 must be treated as pay and taxed accordingly.
Employers are reminded that round-sum meal expenses payments are taxable in full and must be treated as pay. Please see earlier paragraph 'Round-Sum Expenses'.
Where an employer provides luncheon or meal vouchers to employees there is a taxable benefit and the face value of the vouchers (disregarding 19c per voucher) must be treated as pay and taxed accordingly
A taxable benefit does not arise in respect of free or subsidised meals in staff canteens where meals are provided for the staff generally. The facility must be available to all employees. Otherwise, the exemption does not apply.
Please see Employer's Guide to operating PAYE and PRSI for certain benefits for full details.
Reimbursement of allowable expenses
Payments made to the employee which are no more than reimbursement of vouched expenses, actually incurred by the employee in performing the duties of the employment, should not be treated as pay. Expenses which are not treated as pay must not only be actually incurred in the performance of the duties of the employment but must also be wholly, exclusively and necessarily so incurred. Expenses which are incurred by employees in travelling to and from the place of employment are not allowable for tax purposes and any re-imbursement of these expenses must be treated as pay and taxed accordingly.
Some employees use their private cars for business purposes. Reimbursement of motoring expenses incurred can be dealt with in various ways. Employers are reminded that round-sum motoring expenses payments are taxable in full and must be treated as pay. Please see earlier paragraph 'Round-Sum Expenses'.
Reimbursement of Motoring Expenses by Flat-Rate Kilometric allowances
Where employees use their private cars for business purposes, reimbursement in respect of allowable motoring expenses can be made by way of flat-rate kilometric allowances. There are two types of kilometric allowance schemes which are acceptable for tax purposes, if an employee bears all the motoring expenses:
- The prevailing schedule of Civil Service rates or
- Any other schedule with rates not greater than the Civil Service rates
Please see IT 51- Employees Motoring Expenses for full details.
Expenses claims submitted to Revenue
As an alternative to the reimbursement by the employer an employee may submit a claim to Revenue (Car Expenses claim form) (PDF, 643KB) for an expenses deduction (and any wear and tear allowance in respect of the motor vehicle). However, where the employee decides to make such a claim, any re-imbursement of expenses by the employer, including any scale allowances, must be treated as pay and taxed accordingly. Employees cannot claim from Revenue for any expenses that are or will be reimbursed by the employer.
- Date of purchase of car.
- Purchase price.
- Date from which car was used for business purposes.
- Mileage and percentage of business to private use.
- Running Costs - Repairs, Service, Tax and Insurance.
- Any reimbursement of running cost made by the employer.
- CO2 emissions
Please see IT 54 - Employees Subsistence Expenses for full details regarding subsistence rates for absences within the State, absences outside the state and the rules, etc. in relation to the application of these rates.
Employers are reminded that round-sum subsistence expenses payments are taxable in full and must be treated as pay. Please see earlier paragraph 'Round-Sum Expenses'.
Payments by an employer which do no more than reimburse an employee for allowable subsistence expenses which were actually incurred, may be made tax-free in certain circumstances, in accordance with legislation. The expenses concerned must have been incurred "wholly, exclusively and necessarily" in the performance of the duties of the employment.
Where an employee performs the duties of the employment while temporarily away from his/her normal place of work or is working abroad on a foreign assignment, allowable subsistence expenses can be re-imbursed by the employer on the basis of:
- Civil Service rates or Reimbursement of subsistence expenses based on any other schedule of rates and related conditions (e.g. country money (PDF, 76KB) which do no more than reimburse the employee for actual expenditure incurred) or
- Actual expenses which have been vouched with receipts
- IT - 51 Employees' Motoring/Bicycle Expenses - This leaflet covers reimbursement of Motoring Expenses to employees
- IT 54 - Employees' Subsistence Expenses - This leaflet covers reimbursement of Subsistence Expenses to employees
- Employer's Guide to PAYE
- Employer's Guide to operating PAYE and PRSI for certain benefits - A comprehensive guide providing information on the main benefits-in-kind and other non-cash benefits