Section 179 — Income Tax (Earnings and Pensions) Act 2003: Exception for certain advances for necessary expenses

Exception for certain advances for necessary expenses 179 1 An advance by an employer to an employee for the purpose of paying for—

a necessary expenses, or b incidental overnight expenses, is not a taxable cheap loan in relation to a particular tax year if the following conditions are met.

2 The conditions are—

a that at all times in the tax year in question the amount outstanding on such advances made by the employer to the employee does not exceed £1,000, b that the advance is spent within 6 months after the date on which it is made, and c that the employee accounts to the employer at regular intervals for the expenditure of the amount advanced.

3 If, on an application made by the employer, an officer of Revenue and Customs is satisfied that there is good reason to do so in the case of a particular advance, the officer may authorise that either or both of the following limits are increased in relation to that advance—

a the sum of money specified in subsection (2)(a);

b the time limit specified in subsection (2)(b).

4 An application under subsection (3)—

a must be in writing, and b must contain such particulars and be supported by such evidence as an officer of Revenue and Customs may require.

5 In this section “necessary expenses” are expenses (including travel expenses) which—

a the employee is obliged to incur and pay as holder of the employment, and b are necessarily incurred in the performance of the duties of the employment.

6 In this section “incidental overnight expenses” are expenses which—

a are incidental to the employee’s absence from the place where the employee normally lives, b relate to a continuous period of such absence in relation to which the overnight stay conditions are met, and c would not be deductible under Part 5 if the employee incurred and paid them and Chapter 2 of Part 4 (mileage allowances and passenger payments) did not apply.

7 In subsection (6)(b) “ the overnight stay conditions ” has the same meaning as in section 240 (exemption for incidental overnight expenses) (see section 240(4)).