As discussed in E4.421, a sum representing business expenses may be taxable in the hands of an employee as earnings under ITEPA 2003, s 62 or under the benefits code. The distinction has important ramifications since PAYE is normally applicable in the case of earnings whereas expenses payments falling under the benefits code are reportable on forms P11D (see E4.602). In practice, the most likely forms of payment to be taxable under ITEPA 2003, s 62 are round sum allowances and where the employer meets a pecuniary liability of the employee.
Where the employer reimburses business expenses actually incurred by the employee this falls to be treated under the benefits code. This is so even for advances of expenses (but see E4.421 regarding
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