ACCA Advanced Taxation (ATX) Practice Exam

What is the maximum amount of overnight expenses that can be considered an exempt employment benefit in the UK?

1. £10 per night

2. £5 per night

3. £15 per night

4. £20 per night

The correct answer is: £5 per night

The maximum amount of overnight expenses that can be considered an exempt employment benefit in the UK is £5 per night. This limit applies specifically to accommodation costs and is in line with the government’s guidelines on tax exemptions for business travel expenses. When employees are required to stay overnight for business purposes, the employer can reimburse them for accommodation expenses up to this exempt threshold without the employee incurring a taxable benefit. This exemption is aimed at avoiding tax implications for employees while ensuring they are not financially burdened by necessary expenses incurred in the course of their work. If expenses exceed this limit, the excess would typically be treated as a taxable benefit in kind, which would then be subject to income tax and National Insurance contributions. Only the £5 allowance is officially recognized for overnight expenses in this context, while other suggested amounts do not fall under the exemption criteria set by HMRC.