ECH13090 - Particular Occupations: Airline Industry - Flight Duty Allowences and Sector Pay

The Civil Aviation Authority Rules stipulate that flight crew must stay on the ground for a certain period between flights. To compensate for the inconvenience to staff airlines pay for accommodation, meals and ‘staying over’, commonly known as Flight Duty Allowance (FDA) or Sector Pay (SP). These can be very attractive to staff and can double an employees’ pay.

HMRC accepts that flight crews are entitled to tax relief for subsistence expenses incurred whilst travelling and as a result arrangements have been entered into whereby a proportion of the FDA/SP can be paid free of tax and the remainder subject to PAYE/NIC.

As this is slightly different fro the normal guidance on “round sum allowences”, there has been a level of inconsistency in applying the “tax free” element. To avoid industry problems HMRC will adopt a consistent operational approach. This applies to all staff involved in either

• An Employer Compliance Intervention
• A Dispensation, or
• A PAYE Settlement Agreement (PSA)

Where a FDA/SP situation is evident staff should refer to “Flight Duty Alloance Agreements” – A Guide link required or contact the appropriate Employer Support Team.