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In BPP revision kit Q98- Samson and Delilah
“Delilah spent $70 in July 2016 on traveling by train to visit a customer of Rope plc. This amount was reimbursed by Rope plc in August 2016.”
It is an exempt benefit and this is the explanation provided by BPP in the solution –
“There is an automatic exemption for reimbursement of business expenses such as train travel by Delilah (which would be a taxable benefit under general principles) provided that the expense would have been deductible expense for the employee.”
I don’t understand this. There is nothing mentioned about traveling by train in the study text. How would this be considered a taxable benefit under general principles and why is it exempt in this solution? I understand how it is an allowable deduction as this train travel expenses was incurred in the performance of her duties.
Please, I need help understanding this.
Look at the ACCA FA 2016 technical update on page 14 in the employment income section, noted below:
Dispensations
Previously, an employer could agree a dispensation with HM Revenue and Customs to avoid the need to report routine business expenses which are reimbursed to employees.
Dispensations have now been replaced by an automatic exemption which applies provided the expense is an allowable deduction for the employee.
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