Traveling from home to an employee’s regular workplace doesn’t qualify for tax relief, known as “ordinary commuting.” Moreover, if the employer reimburses the journey’s costs, those costs become taxable. There are exceptions, particularly when the employer covers the cost of the employee traveling home safely in a taxi late at night. On the other hand, traveling to a “temporary workplace” is considered a qualifying business journey, and if the employer reimburses the costs, there’s no taxable benefit. It’s worth noting that associated subsistence costs, such as overnight hotel accommodations, are also tax-free. HMRC Booklet 490 offers detailed guidance on employee travel, along with comprehensive examples, available online.

With the increasing number of employees working from home, attention should be given to the latest HMRC guidance on such arrangements.

WORKING FROM HOME

Whether an employee’s home is a workplace doesn’t impact tax relief availability for travel expenses. Travel expenses from home to a permanent workplace only qualify for tax relief if the journey is in the performance of employment duties.

Even if it’s accepted that the employee’s home is a workplace, they might not be entitled to tax relief for travel costs between their home and a permanent workplace. This is because where an employee lives is usually a personal choice, and the expense of traveling from home to any other place arises from that personal choice, not an objective requirement of the job.

HMRC guidance indicates that if an employee performs substantive job duties at home as an objective job requirement, their home is considered a workplace for the “travelling in the performance of duties” rule. In this case, the employee is entitled to tax relief for travel expenses from home to other workplaces, as this travel is in the performance of duties.

HMRC usually accepts that working at home is an objective job requirement if the employee needs specific facilities to perform their duties, and those facilities are only practically available at their home.

However, HMRC won’t accept that working at home is an objective job requirement if the employer provides suitable facilities elsewhere that the employee could practically use, or if the employee chooses to work from home.

Even if the employee works at home as an objective job requirement, tax relief for travel costs between home and a permanent workplace is only applicable for travel on days when the employee’s home is considered a workplace. On other days, the employee is traveling between home and a permanent workplace, which constitutes ordinary commuting.

LATE NIGHT TAXIS PAID BY EMPLOYERS

Employer payments for taxis to take employees home late or at night are tax-exempt if:
• The conditions for failure of car-sharing arrangements are met (see below); or
• All four late-night working conditions are met; and
• The number of such journeys for which a taxi is provided for that employee in the tax year is no more than 60.

There are four late working conditions, all of which must be met.
1. The employee is required to work later than usual and until at least 9 pm.
2. This occurs irregularly.
3. By the time the employee ceases work, either:
a. public transport has ceased, or
b. it would not be reasonable to expect the employee to use public transport.
4. 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 both late-night journeys and failure of car-sharing arrangements together. This means that journeys under both headings must be combined when determining whether the 60 journeys limit has been reached.