SE71305 - Tax treatment of Working Rule Agreements: consequences for employee from 1998/99

The guidance at SE71306 – SE71319 explains when certain employees in the construction and allied industries can receive travel and lodging allowances under the terms of a Working Rule agreement without tax being deducted under PAYE.

New rules on employee travel and subsistence expenses were introduced by Section 61 Finance Act 1998. The new rules do not change the circumstances in which allowances can be paid tax free under the terms of a Working Rule agreement. So the guidance at SE71306 – SE71319 applies to all years.

But, in any case involving 1998-99 or later years, the new rules on employee travel and subsistence mean that

• an employee who receives tax free allowances under the terms of a Working Rule agreement may be entitled to a deduction under Section 198(1) ICTA 1988 for further expenses he or she incurs out of their own pocket; and
• an employee who does not receive tax free allowances under a working rule agreement may be entitled to a deduction under Section 198(1) for the relevant expenses.

For details of the new rules on employee travel and subsistence for 1998-99 and later years see SE32000. For an example showing how the new rules apply in cases involving working rule agreements see Booklet 490 Section 8.25.