Temporary Workplace – Relief for travel expenditure

 Temporary Workplace – Relief for travel expenditure

As the self assessment season comes to a largely successful end, the question of expense claims for an employee’s travel to a temporary workplace was raised in respect of one of the later returns!  With more and more individuals and employees having to travel between places of work, it is important that the detail is understood.

Tax relief for travel expenses cannot normally be claimed for ‘ordinary commuting’.  This blog will discuss what constitutes ordinary commuting, and for what journeys you are able to claim relief for travel expenses.

Generally, there is no relief available to an employee for the cost of travelling from home to a permanent workplace.  This is classed as ‘ordinary commuting’ and would cover travel from home to Cardiff or from home to John O’Groats if that was where your permanent workplace was.  

Relief or expenses can be claimed for business travel to other locations where that travel is purely in relation to and for the benefit of the business and this would include trips to suppliers, customers and other such journeys.  Where a situation arises that an employee is asked to work more regularly in a temporary workplace, relief or expenses can be claimed subject to the following guidelines.

A workplace is considered temporary if an employee spends, or expects to spend, no more than a maximum of 24 months at that location.  This can be on a full time or part time basis.  If during a temporary placement a decision is made for the move to become longer than 24 months then travel will automatically default to ordinary commuting from the date of that decision and relief will be disallowed from that point.

It is well worth noting the fact another workplace will remain temporary regardless of the duration of placement as long as no more than 40% of working time is spent there.  

Examples;

  • An HSJ employee has worked in Newport for 5 years.  They are sent to work full time in the John O’Groats branch for 12 months.  Is relief available to the employee for the travel costs between home and John O’Groats?

YES AS UNDER 24 MONTHS

  • An HSJ employee has worked in Newport for 5 years.  They are sent to work full time in the John O’Groats branch for 28 months.  Is relief available to the employee for the travel costs between home and John O’Groats?

NO AS OVER 24 MONTHS (EVEN IF THE PLACEMENT TURNS OUT LESS THAN 24 MONTHS)

  • The same facts as 1 above but the employee is informed after 12 months that the placement will continue for another 18 months. What is the position here?

THE TAX RELIEF WILL CEASE AFTER 12 MONTHS I.E. WHEN THE DECISION WAS MADE TO EXTEND THE PLACEMENT

  • An HSJ employee has worked in Newport for 5 years.  They are sent to work 1 out of 5 days a week in the John O’Groats branch for 36 months.  Is relief available for the travel costs between home and John O’Groats?

YES AS ONLY 20% TIME SPENT PERFORMING DUTIES EVEN THOUGH MORE THAN 24 MONTHS

It is important for employers to have an awareness of the legislation and to also make sure tax payers are maximising the reliefs and claims that are available to them.  The legislation in its entirety is detailed and complex and should not to be confused with travel between two different jobs or employments and other common journeys.

http://www.hmrc.gov.uk/helpsheets/490-chapter3.pdf 

Should you want more detail about any of the above, or for a review of your position, please do not hesitate in contacting us 0845 365 1000