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Exempt home to work travel

20 July 13 | By: Jas Jhooty

Introduction

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HMRC generally do not allow tax relief on any home to office or office to home journeys. They define this as ordinary commuting and HMRC’s argument is that as the employee is not performing their duties of employment while they are travelling to their workplace, no tax relief is allowed.

However there are some very limited circumstances when employers are allowed to pay for their employee’s commuting costs: -

Emergency call-out

These can be considered to be non-taxable only if the employee gives advice on how to handle the emergency on receipt of a telephone call. As long as the employee takes responsibility for handling the emergency and continues to give advice on their journey into work, the costs of the journey can be reimbursed to the employee tax-free. This is because the employee has commenced to perform their duties of employment before the journey began.

Industrial action on public transport

If public transport is disrupted due to strikes or any other industrial action, then the employer can either pay for alternative travel costs or arrange for overnight accommodation near the place of work. Please note there is no similar provision allowed for public transport being disrupted due to adverse weather conditions.

Late night working

The costs of journeys home can be allowed if the employee is occasionally required to work late as long as: -

  • these occasions are not regular or frequent
  • public transport has ceased or because of the lateness of the hour it would be unreasonable to expect the employee to use public transport
  • the arranged transport is between the workplace and the employee’s home
  • the journeys home are later than usual and at least after 9pm
  • such journeys that satisfy all of the above conditions number no more than 60 in a tax year.

A lot of employers are under the misapprehension that they can automatically pay for 60 late night journeys home and only the excess above 60 are taxable. HMRC look into this area very closely to ascertain whether there are in fact exceptional circumstances when the employee was indeed required to work late. If this cannot be proved HMRC will contend that these reimbursements are regular in nature and should be classified as additional pay.

Perversely no early journeys to work, even if they have to occur before public transport has commenced can be provided tax-free.

Disabled employees

The costs of home to work travel can be provided tax-free to severely and permanently disabled employees who are incapable of using public transport. This provision is also extended to the provision of an adapted company car for the disabled employee as long it is made clear to the employee that they are only allowed to use the vehicle for ordinary commuting.

How emTax can help

Arguments with HMRC about exempt home to office travel can be a literal minefield where you can easily be tripped up. HMRC do not like to allow any home to office travel. In fact a few years ago the government very nearly abolished the exemption for late night working and were only stopped when it was demonstrated that the abolition would disproportionately affect women.

As experts in employment tax we can assist you in designing your HR policies surrounding employee travel, and represent you in any arguments you may have with HMRC.

If you require any advice on this or any other employment tax matter, please do not hesitate to contact us .

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