Income Tax (Earnings and Pensions) Act 2003 section 70

Sums in respect of expenses

Section 70 identifies the two circumstances in which a tax charge arises on sums paid to or through an employee in respect of expenses.

• A sum paid directly to an employee in respect of expenses by reason of their employment in a tax year is subject to the rules in this chapter.
• A sum put at an employee's disposal for expenses by reason of their employment, which the employee then pays away in respect of expenses, is also caught by this chapter.
• The employee does not need to hold the employment at the exact time the sum is paid or paid away, provided the employment is held at some point during the relevant tax year — so the rules can apply to prospective and former employees.
• The chapter does not apply to the extent that the sum already constitutes taxable earnings under another provision, such as a round sum expenses allowance taxed as general earnings.