Income Tax (Earnings and Pensions) Act 2003 section 179

Exception for certain advances for necessary expenses

Section 179 exempts small, temporary advances made by employers to employees for necessary expenses or incidental overnight expenses from being treated as taxable cheap loans, provided certain conditions are met.

• An advance for necessary expenses or incidental overnight expenses is not a taxable cheap loan if the total outstanding on such advances does not exceed £1,000 at any point during the tax year, the advance is spent within six months, and the employee regularly accounts to the employer for the expenditure.
• Necessary expenses are those the employee is obliged to incur as part of their employment and that are necessarily incurred in performing their duties, including travel expenses.
• Incidental overnight expenses are costs incidental to the employee being away from home, relating to a continuous period of absence where overnight stay conditions are met, and which would not otherwise be deductible.
• HMRC may, on written application by the employer with supporting evidence, authorise an increase to either or both the £1,000 limit and the six-month spending deadline for a particular advance where there is good reason to do so.