The maximum amounts of incidental overnight expenses that an employer may pay tax free are
If a payment is made that exceeds these limits, the whole of the
payment becomes taxable and not just the excess, see example
EIM02760. The limit is applied to the
whole of the period that the employee spends away from home and not
to each night separately, see example
EIM02770.
Where the employer has a policy that requires the employee to
pay back any amount received that exceeds the limit, and repayment
is made within a reasonable time, the payment to the employee
should be treated as not exceeding the tax free limit.
