Allowances are taxeable in VS, and they have already been taxed when you get them. Inland revenue assume you will spend 75% of them and tax at 22% of the remaining 25% is deducted at source and paid by the company.
However, I think (and am willing to be corrected on this) that some time in the future (possibly 1 Apr 06) Inland revenue are planning to tax all allowances at your highest rate and anything you spend downroute (on living expenses) is deductable.