Updated HMRC Guidance on Employee Travel

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Gerry MacCrossan

Updated HMRC Guidance on Employee Travel

Ordinary Commuting and Tax Implications

Travelling from home to an employee’s normal workplace is considered “ordinary commuting” and does not qualify for tax relief. Furthermore, if these travel costs are reimbursed by the employer, they are taxable. There are exceptions to this rule, notably if the employer pays for an employee’s taxi ride home late at night for safety reasons.

Travel to Temporary Workplaces

Journeys to a “temporary workplace” are considered qualifying business trips. When these travel costs are reimbursed by the employer, they do not constitute a taxable benefit. This also applies to associated subsistence costs, such as overnight accommodation, which are treated as tax-free benefits. HMRC’s Booklet 490 provides detailed guidance on employee travel, including comprehensive examples, and is available online.

Remote Working Considerations

With the increasing trend of employees working from home, often for at least one day a week, it is crucial to stay updated with HMRC’s guidance on such arrangements. The status of an employee’s home as a workplace does not impact the availability of tax relief for travel expenses. Travel from home to a permanent workplace qualifies for tax relief only if it is part of performing the duties of the job.

Home as a Workplace Criteria

Even if an employee’s home is accepted as a workplace, it does not automatically entitle them to tax relief for travel costs between their home and the permanent workplace. This is because the location of an employee’s residence is typically a personal choice, and any travel from there is a result of that choice, not a job requirement. HMRC states that working from home must be an objective requirement of the job, necessitated by the need for specific facilities that are only available at the employee’s home, to consider the home a workplace for travel expense purposes.

Late Night Taxis Paid by Employers

Payments by the employer for taxis to take employees home late or at night are exempt from tax if:

  • the failure of car sharing arrangements conditions are satisfied (see below); or
  • all 4 late night working conditions are satisfied; and
  • the number of such journeys for which a taxi has been provided for that employee in the tax year is no more than 60.

There are 4 late working conditions, all of which must be satisfied.

  • The employee is required to work later than usual and until at least 9pm.
  • This occurs irregularly.
  • By the time the employee ceases work, either:
  • public transport has ceased, or
  • it would not be reasonable to expect the employee to use public transport.
  • The transport is by taxi or similar road transport – this condition is not contentious and is not referred to again in this guidance.

The 60 journeys are a single limit that applies to late night journeys and failure of car sharing arrangements together. This means that journeys under both headings must be added together when working out whether or not the 60 journeys limit has been reached.