Employee expenses - overview
You might pay an employee expenses to cover any costs they incur while carrying out their duties. These expenses can be reimbursed where:
- your employee incurred the expense wholly, exclusively and necessarily in the performance of their duties
- the expenses are reimbursed on the basis of vouched receipts.
Employees also include directors of your company.
The most common expenses reimbursed relate to business travel. This covers expenses such as the cost of travel, accommodation and meals.
You can reimburse your employees’ expenses of travel (and subsistence relating to that travel) tax-free in certain circumstances:
- Your employee must be temporarily away from their normal place of work in the performance of the duties of their employment.
- The travel expenses must be necessarily incurred in the performance of the duties of the employment.
- The subsistence expenses must be incurred as a result of travelling in the performance of the duties of the employment.
You may reimburse the actual cost incurred or you may use the approved Civil Service rates for travel and subsistence.
Your employee’s return journeys from home to work, and their return journeys, are generally considered to be private travel. If you repay the expense of this travel it must be treated as pay. Your employee will pay Income Tax, Universal Social Charge and Pay Related Social Insurance on the amount repaid to them.