24 months from home (why temporary workplaces aren’t what they seem)

First published on 22 February 2023 by Alastair
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If you were with me yesterday, you’ll know I’m exploring the issues around claiming tax relief for travel.  Last time, we considered what is or is not a permanent workplace and what constitutes ‘ordinary commuting.’ Today, I’m going to look at something that you may well not have heard of, but which is actually very important in deciding what travel expenses you can claim.

If your employer sends you to work at a place for a period which is expected to, and does in fact, last for no more than 24 months, that place is regarded as a temporary workplace. However, before you rejoice and start claiming tax relief, there are, inevitably, some complications…

The first of these is that if you will be working to a ‘significant extent’ (I’ll explain this in a minute) at a place and it is expected at the outset that this will be for more than 24 months, no relief is available. But, if the period is initially expected to be for less than 24 months and then circumstances change so that the period is extended, you can claim relief up to the time when you were told that the 24 months will be exceeded.

Secondly, in some circumstances periods of more than 24 months can still qualify. The key phrase here is ‘continuous work.’  The relevant legislation denies relief where your attendance at a place is in the course of a period of continuous work at that place which will exceed 24 months. However, it will only be a ‘period of continuous work’ if the duties of the employment are performed to a ‘significant extent’ at the place. What is a ‘significant extent’ though? Well, HMRC interprets a ‘significant extent’ as meaning that an employee spends at least 40 per cent of their working time at that place, but this rule is sometimes misinterpreted.

In addition, regular attendance at a workplace over a period of more than 24 months will usually mean that place is a ‘permanent workplace’ (and thus no relief is available) even if the employee spends less than 40% of their working time there. For example, if over the course of their employment a full-time employee normally works in another office every Friday, then clearly that place will be a permanent workplace, because attendance is not for a limited duration and is regular.

On the other hand, if you are required to attend a workplace on an irregular basis for a fixed period of say, 36 months, it can still be considered a temporary workplace even though the visits may average out at one day per week. In these circumstances, the 24-month rule does not apply because it is both for a limited duration and amounts to less than 40% of your working time.

Long-term arrangements can also be accepted as involving a temporary workplace. This is a subjective judgment which HMRC will make, judging if each visit represents a temporary purpose based on the specific duties performed. If each visit is to perform a fixed task of a self-contained nature (as opposed to the continuation of an open-ended duty such as staff management), so that the purpose of each visit when considered alone is temporary, relief can be given for the travel expenses.

One common, but contentious, situation is where a director attending board meetings in regional offices. If the director has a permanent workplace in, say, Glasgow but attends a board meeting regularly in Aberdeen, although this is a regular event, each meeting is for a self-contained temporary purpose so relief for travel expenses is available. This is because the director already has a permanent workplace elsewhere. However, if the director worked from home, then it is very unlikely that relief would be given for attendance at board meetings. Note, the same rules apply to non-executive directors.

If you are still confused, please do get in touch.  Although for many people these are seemingly complex and minor issues, it is never a good idea to get involved in an argument with HMRC. Far better to avoid such problems and get your travel expense tax relief right in the first place!

Vivian Linstrom, M&S Accountancy and Taxation

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