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bigduckontax, Accountant
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I am a UK resident working for a UK employer but currently

Customer Question

I am a UK resident working for a UK employer but currently working on a 6 month international assignment (with same UK employer). I continue to receive an annual salary of £75000 and in addition to this a per diem allowance (to cover expenses) of £76 subject to statutory deductions.

I read on the HMRC website that payments at or below the defined subsistence allowance threshold are exempt from tax and NI deductions. However I noticed my employer is taxing the per diem payments as part of my total gross salary.

Please can you advise if I can claim tax back on the per diem allowance? Kindly note that the per diem payment is a fixed rate and not subject to me providing actual expense receipt. Will HMRC require I produce all expense receipt for the 6 month to claim the tax back?

Thanks
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

Travel allowances, provided they are within HMRC guidelines, are not taxable emoluments. An allowance of a set amount per day is quite normal and you would not be required to produce vouchers in support. You should ask you employer to stop deducting PAYE from those parts of your income. If they won't then watch your pay slips and your P60 carefully. If they are not being declared as taxable on them then there is something fishy going on, a not unusual occurrence. This area is a Tom Tiddler's ground for avoidance, fraud or just plain stupidity.

Take it up with your tax office in writing. It can all be adjusted on your annual self assessment by entering the total amounts of travel allowance received in box 2.5 [03/04 return form]. The over taxation by your employer will then come out in the wash as it were and you will get a refund. I would also be inclined to write to your tax office as well to explain what is going on and why the numbers in box 2.5 are so big.

I do hope I have been of some help to you.
Customer: replied 3 years ago.
Thank you for the response. The deductions are reflected on my PAYE in my payslips. I should be receiving £2280 on the per diem element but it's coming down to £1100. I am just worried it might be very difficult claiming back £1180 x 6 = £ 7080 in my self assessment return.

Expert:  bigduckontax replied 3 years ago.
That is why to tell the tax office what si happening. There is always the chance that they will write to your employer to stop taxing subsistence payments. Just stick it in box 2.5 and it should all come out in the final computation, but be ready for a query and check HMRC's computation with an eagle eye and appeal if it is wrong.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3612
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support. Sorry for the typo in my second post, it should be 'is' not 'si!'

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