I'm not sure about other airlines but certainly in my airline (UK charter) our subsistence allowance is tax free (whether we night stop or not).
I think it's just whatever deal your company has negotiated with the Inland Revenue. As for fixed rate expenses allownace, well that's another ball game - the Inland revenue have just backed out of a signed agreement with our copmany and it's now subject to legal action - so watch this space as I'm sure if our FREA increases then other airlines will follow.
TFS
