The rise in WFH during the pandemic has led to a situation where, for many people, it’s the norm, with three days mid-week in the office being book-ended by Monday and Friday in front of a computer in your kitchen or study (other rooms are available). Things can get even more complicated if you have more than one ‘permanent’ office outside the house: for example, where your employer requires you to visit both a head office and regional offices on a regular basis. Pre-pandemic, travel expenses were (relatively) straightforward, but how do you work out what you can – and cannot – claim nowadays?
The answer depends on what is classified as a ‘workplace.’ However, we need to go back to go forward: firstly, the law provides two basic routes to tax relief for travel.
The first of these is that the journey is necessarily incurred in the performance of the duties of the employment - in other words that the journey itself is actually part of the work – this would be travel from a head office to a regional office for example.
The second is that the travel is in order for work to take place and is not ‘ordinary commuting.’ Ah, yes, but what is a ‘permanent workplace’ and what is ‘ordinary commuting?’ Good questions!
It is a long-established principle that travel both to and from a temporary workplace, whether you start out from home or from some other place, is not ‘ordinary commuting’ and thus is eligible for tax relief. Put more succinctly, ‘ordinary commuting’ is defined legally as travel between a permanent workplace and home or anywhere else that is not a workplace. And a place is a permanent workplace if attendance is regular and it is not a temporary workplace – but, as I’ll explain below, defining what constitutes a temporary workplace is not straightforward.
So, what actually is a ‘workplace?’ This starts to get even more complex, but bear with me as this could be valuable to you if it means that you can start to claim for some expenses you were not aware of or (sadly) that you have to stop claiming for something you thought was yours by right.
Legislation defines what is a ‘workplace’ and then goes on to set out whether such a workplace is temporary or permanent, but those definitions contain a number of subjective and seemingly contradictory expressions.
More specifically, a ‘workplace’ must be a place at which it is necessary for the employee to attend for work. This seems on the face of it to be clear, but, as I said at the outset, modern working practices have changed and many people can now choose to either work from home or in the office. Consequently, it could be argued that since both places are optional rather than necessary, neither is a workplace at all within the strict definition. In those circumstances, travel costs to and from both places would be treated as private travel and disallowed. However (I told you this was complex…), this there is a problem here in that, obviously, the individual must work somewhere, so at least one of the places must be necessary.
Recent legal test cases have shown that while the courts agree that it’s possible for there to be two workplaces, a home and an office, there was, in each of these instances, no tax relief for travel. Interestingly, one of these cases involved an employee of HMRC who worked two or three days at home and the rest of the week in London.
Despite this, it is still possible to obtain tax relief for travel between home and a permanent place of work if that travel is undertaken whilst already in (rather than for) the performance of the duties or it is travel between two permanent workplaces. In each case, HMRC will only accept that relief is available in cases where the employee works from home as an objective requirement of the job, rather than through personal choice. This element of personal choice is why the two cases referred to above failed to result in the employees being allowed tax relief.
That said, where an employee works from home for part of the time, relief will only be given in respect of travel between home and a permanent workplace during those times that the employee’s home is also a workplace.
Here’s an example of how this last one might work. Say an employee works at home from Monday to Thursday and travels to the employer’s office each Friday. In these circumstances, no relief is available for travel to the office on the Friday because on that day home is not a workplace and the journey is therefore ‘ordinary commuting.’ However, if the employee is unexpectedly called into the office on a Thursday, relief could be given because, on that day, home is a permanent workplace – so the employee is travelling between two permanent workplaces. HMRC has agreed that this is the case, so if it happens to you then you are most certainly entitled to claim for travel on such a day.
Now, if you think that’s complicated (in which case, please do get in touch and we’ll do our best to help), wait till you hear about the 24-month temporary workplace… of which more tomorrow.
Vivian Linstrom, M&S Accountancy and Taxation