Expenses of overseas employment

Expenses of overseas employment

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I am aware that where a UK resident individual performs employment duties wholly outside the UK, the costs of travelling incurred by the employee from the UK to take up the overseas employment and for the return journey are deductible.

My understanding is that board and lodging expenses outside the UK provided or reimbursed by the employer to enable the employee to perform the duties of the overseas employment (including spouse/family) are also deductible.

My question therefore is what is the position if the individual incurs the board and lodging expenses but these are not reimbursed?  Can a deduction still be made for these costs?

Also is my reading of the situation correct in that the travelling costs are deductible whether or not reimbursed?

Any feedback very gratefully received.

Replies (3)

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By Steve Kesby
16th Sep 2014 14:37

Your understanding...

... is correct.

ITEPA 2003, s. 341 and 342 permit the employee an expense deduction for travelling to, from and between overseas employments, but s, 376 only permits a deduction to the extent that the employee's earnings include a benefit representing, or a reimbursement of, the accommodation/subsistence costs.

There is provision similar to the accommodation/subsistence point in relation to travel costs (which then covers home/work travel during the currency of the employment), in s. 370 and 371, but they get trumped by s. 341 in relation to travel at the beginning and end of the employment.

There was a thread a while back, where somebody put forward quite a good argument for some of the employment earnings being, in essence, a reimbursement. It's HERE.

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By stephenpotter
16th Sep 2014 17:09

Many thanks for your reply Steve,

I will review the thread you suggest but meanwhile, are you aware of whether the deduction for travel costs to/from the overseas employment extends to cover return trips to visit the family, i.e. trips during the period of the employment as well as at the beginning and end?

Many thanks again.

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By Steve Kesby
17th Sep 2014 11:00

Unfortunately not

S. 341 only covers the journeys at the start and end of the employment.

S. 370 covers travel while the employment is going on, and s. 371 covers spouses/family journeys.

Both s. 370 and s. 371 operate on the same basis that you can only get a deduction to the extent that the employee's earnings include a benefit or reimbursement.

You may also need to check the relevant treaty to ensure that the employment earnings are taxable in the UK.

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