myIR, payments and more
Employers may pay reimbursing allowances to employees to compensate for on-the-job expenses.
These payments can include allowances for:
- mileage - see also Travelling allowances>
Are reimbursing allowances taxable?
No. However, if the payment is more than the employment-related expenses, the excess is taxable.
What do I have to do?
You can make a reasonable estimate of the costs incurred by an employee and treat this as if it was the amount paid out by the employee, or you can use actual receipts.
- Add the amount of the allowance to your employees' net salary or wages (ie after PAYE) when you pay them.
- Do not show the tax-free amount on your Employer monthly schedule (IR348).
- Show the total amount of the tax-free allowance paid in your wagebook.