As already outlined, most travel and subsistence payments made by employers are taxable on the employee. This means that the employer should account for tax, and often national insurance, through the PAYE system and/or on a P11D. The method can vary depending on the type of tax charge arising.
If a deduction is allowed, this has to be claimed personally by the employee, either by writing to HMRC or entering the amount in the relevant section of his self assessment tax return.
If HMRC are approached about payments being made, and are happy that the payments are doing no more than reimbursing the actual travel and subsistence costs, they will grant a dispensation. This means that the employer does not have to tax the payment and the employee cannot claim tax relief on that amount. If the employer does not reimburse all of the actual costs incurred, the employee may be entitled to tax relief on the balance.
Obviously, a dispensation can save a lot of administrative time, but accurate records of costs and payments will still need to be kept.