NIM05682 | Class 1 NICs: expenses and allowances: household expenses

Payments to reimburse additional costs

With effect from 6 April 2003, payments by an employer to reimburse employees for reasonable additional costs they incur while working at home under homeworking arrangements are exempt from tax. See EIM01472.

Such payments are, of course, already disregarded for NICs purposes by virtue of paragraph 9 of Part 8 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004) because they are reimbursements of expenses actually incurred by an earner in carrying out his employment.

See NIM05020 for general guidance regarding the treatment of business expenses for NICs purposes.

It is important to remember, however, that the appropriate figure is not a maximum and greater amounts can be paid without a tax or NICs liability arising as long as the employer is able to provide evidence that such sums have been incurred.

The position with regard to the reimbursement of household expenses to ministers of religion has not changed. See NIM05698 for guidance.