Items not treated as pay

Repayment of expenses

An employee may incur expenses as part of their work. These may include subsistence, motoring, bicycle or other expenses. From 1 January 2024, untaxed payments to an employee, relating to travel and subsistence, must be reported to Revenue when the payment is made. For further information, please see Enhanced Reporting Requirements (ERR).

Subsistence expenses

An employee may need to perform duties of employment while either:

• temporarily away from their normal place of work
• or
• abroad on a foreign assignment.

The employer can repay any subsistence expenses to the employee that are incurred while performing these duties. Employers can do this on the basis of either:

• acceptable flat-rate allowances
• or
• actual expenses vouched with receipts.

Tax-free subsistence payments are not permitted for temporary absences at a location within 8 km of an employee's work or home.

Acceptable flat-rate allowances

The employer can repay expenses to the employee using:

• the Civil Service subsistence rates
• rates not higher than Civil Service rates
• another schedule of rates published by Revenue (subject to any accompanying conditions, for example, 'country money').

The employer does not need Revenue approval to use these rates.

To repay expenses based on any other schedule of rates and related conditions, the employer will need Revenue approval.

Actual expenses vouched with receipts

The employer can repay the employee the actual expenses they incurred. These payments are not to be treated as pay for tax purposes where the:

• employee incurred them wholly, exclusively, and necessarily, when carrying out the duties of their employment
• expenses were repaid to the employee on the basis of vouched receipts.

Motoring or bicycle expenses

Expenses for travel to and from the employee's home to the place of employment, are not allowable expenses for tax purposes. Any repayment of these expenses must be treated as pay and taxed accordingly.

The employee may use their private car, motorcycle, or bicycle, for business purposes. These allowable expenses can be repaid by the employer to the employee tax-free:

• through flat-rate kilometric allowances
• actual costs incurred.

Two types of kilometric allowance schemes are acceptable for tax purposes:

• Civil Service rates
• any other schedule with rates not greater than the Civil Service rates.

If the employer repays the actual costs of travel to an employee, these payments will not be treated as pay for tax purposes where:

• the employee was necessarily obliged to pay the costs to carry out their duties
• the costs were repaid to the employee on the basis of vouched receipts.

An employee may make a claim to Revenue for any travel expenses that were not reimbursed by the employer. Where the expenses are motor expenses, an employee should use the Car expenses claim form.

Other expenses

An employee may have work expenses other than subsistence and motoring or bicycle expenses. If the employer repays these expenses, they will not be treated as pay for tax purposes where:

• the employee incurred them wholly, exclusively, and necessarily, when carrying out the duties of their employment
• the expenses were repaid to the employee on the basis of vouched receipts.

All entertainment expenses must be treated as pay by the employer.

Note

An employee may decide to personally claim expenses and allowances reflecting the actual costs incurred by them. Where this happens, and the employer has reimbursed the expenses, the amounts paid by the employer must be treated as taxable salary.

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