Items not treated as pay

Repayment of expenses

Your employees may incur expenses as part of their work. These may include subsistence, motoring, bicycle or other expenses.

Subsistence expenses

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

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

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

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

Acceptable flat-rate allowances

You 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'). 

You do not need Revenue approval to use these rates.

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

Actual expenses vouched with receipts

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

  • your 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.

Motoring or bicycle expenses

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

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

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

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 you repay the actual costs of travel to your employee, these payments will not be treated as pay for tax purposes where:

  • your 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.

Your employee may make a claim to Revenue for any travel expenses that were covered by you. Where the expenses are motor expenses, they should use the car expenses claim form.

Other expenses

Your employees may have work expenses other than subsistence and motoring or bicycle expenses. If you repay these expenses, they will not be treated as pay for tax purposes where:

  • your 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

Your employee may decide to personally claim expenses and allowances reflecting the actual costs incurred by them. Where this happens and you have reimbursed their expenses, the amounts paid by you will be treated as taxable salary.

Next: Refunds of pension contributions