When employee allowances for additional transport costs for home to work travel are exempt from income tax
Section CW 18 of the Income Tax Act 2007 exempts from tax some allowances that an employee receives from their employer to reimburse additional transport costs arising from the employee’s travel from home to work. This means that PAYE does not have to be deducted from the allowance. The purpose of this Statement is to clarify when this exemption applies and to help employers to determine the amount of tax payable.
Income Tax Act 2007, s CW 18