SE34003 - Travelling expenses: employees working abroad - the Schedule E expenses rule - expenses that may be deducted - example

An employee who is resident and ordinarily resident in the United Kingdom is sent by her employer to work in Germany on secondment for 8 months. The employer pays the travel expenses of the employee and her husband and also pays for their board and lodging while they are in Germany.

Some of the expenses met by the employer are deductible under Section 198(1) ICTA 1988, some are deductible under Section 194 ICTA 1988 and some are not deductible at all.

The cost of the employee’s travel to and from Germany is deductible under Section 198(1) because Germany is a temporary workplace, see SE32065. If it were not deductible under that section it would be deductible under Section 194, see SE34040.

The cost of the employee’s husband’s travel to and from Germany is not deductible under Section 198(1), see SE31980. It is deductible under Section 194, see SE34050.

The employee’s board and lodging is deductible under Section 198(1), see SE31815. If it were not deductible under that section it would not be deductible under Section 194, see SE34040.

The employee’s husband’s board and lodging is not deductible under Section 198(1), see SE31980 and nor is it deductible under Section 194, see SE34050.

This is summarised in the table below.