Employees with a Permanent Workplace
Most employees have a place of work which they regularly attend. This is known as their permanent workplace and travel to and from it is deemed to be ordinary commuting and o tax deduction is allowed for this travel. However, if they make occasional trips out of the normal workplace to a temporary workplace, hat is a business journey and a tax deduction can be claimed.
An employee can claim full tax relief on business journeys.
A business journey is one which either involves travel:
- from one place of work to another or
- from home to a temporary workplace or
- to home from a temporary workplace
Subsistence includes food, drink and accommodation incurred whilst an employee is away from their permanent workplace. Subsistence is specifically treated as a part of business travel, so can only be claimed if the travel is deemed to be a business journey and not ordinary commuting. Therefore, if the travel qualifies for a tax deduction, so will the subsistence costs.
Where an employee is sent away from their permanent workplace, the new workplace will be regarded as a temporary workplace if the posting is either:
- Intended to be for less than 24 months, or
- Is expected to be for more than 24 months, but the employee is expected to spend less than 40% of their working time at the new workplace
The employee must still retain their permanent workplace.
Many employees, such as construction workers or IT consultants, do not have a permanent place of work but work at lots of different sites for days, weeks or months. Their travel and subsistence can be reimbursed tax free if the period spent at each site is expected to be, and actually is, less than two years.
Other Employees with no Permanent Workplace
Where travelling is an integral part of the job, e.g., a travelling salesman who does not have a base at which he works, travel and subsistence expenses incurred are tax deductible.
Home based employees
Where employees work at home occasionally, or even regularly, it is necessary to determine if their home is their place of work. This is decided by determining if there is an objective requirement for the work to be performed at home rather than elsewhere. If the home is determined to be their place of work then all travel and subsistence costs for trips to and from home to any office will be deductible.
However, if the employee regularly reports to an office and it is not an objective requirement for the work to be performed at home then any commuting cost between home and the office would not be an allowable expense. But trips between home and temporary workplaces will be allowed.
How can we help?
We can help you to decide whether an employee can be paid expense payments which are covered by tax relief and do not result in a taxable benefit.
Please contact us if you require any advice about expenses payments.