Overview
Welcome to another session of topical tax tips with Bernard Critchley, Tax Manager at Aspen Waite. Today, we delve into the complexities of business travel expenses, focusing on the expenses incurred by an employee and whether those reimbursements give rise to a tax charge or not.
Travel from Home to Work
It’s a well-established fact in income tax law that the costs incurred by an employee traveling from their home to their normal place of work cannot be reimbursed without a tax charge to the employee. But what defines a "normal place of work"?
For most, it’s straightforward as they only commute to one location. However, if you have multiple sites, each could be considered a permanent workplace if:
- You have an established pattern of visiting them.
- You spend 40% of your time at a site.
- The arrangement at the outset exceeds 24 months.
You cannot change your normal place of work by merely working from home or by occasionally visiting the office. However, genuine commitments to a client or another business premises allow the reimbursement of travel expenses without tax implications. For example, if you are required to work at a different office for a few months, that travel is not considered normal commuting, and reimbursement would not attract tax or National Insurance.
Traveling Appointments
For employees with traveling appointments, such as area sales representatives who have no office base, the journey from their home to their first customer is allowable. However, for care workers traveling to multiple clients, only the journeys between clients are allowable, while travel to the first client and from the last client home are considered normal commuting.
Mileage Rates and Claims
Once you establish that a journey qualifies for reimbursement, the rates you can claim are:
- Cars: 45p per mile for the first 10,000 business miles, then 25p per mile thereafter.
- An additional 5p per mile can be claimed for each passenger.
If your employer does not reimburse the full amount, you can claim the difference on your self-assessment tax return or by using form P87.
Subsistence Allowances
To qualify for a subsistence allowance, the expense must be linked to the business journey. For example:
- Allowable: Hotel expenses and meals for an overnight stay required for business.
- Not Allowable: Lunch costs incurred during a normal commute to a temporary workplace.
Reasonable Expenditure
HMRC will not disallow costs simply because cheaper options were available. However, they will scrutinize the scale of expenditure and disallow anything deemed excessively lavish.
Key Takeaways
- Check Journey Qualifications: Determine if your travel to a temporary or permanent workplace qualifies for reimbursement.
- Claim for Passengers: Don’t forget to claim the additional allowance for any passengers.
- Claim Shortfalls: If your employer does not reimburse the full allowance, claim the shortfall through your tax return or form P87.
- Subsistence: Ensure you claim subsistence allowances correctly, linking them to the business journey.
For personalized advice on business travel expenses or any other tax-related matters, feel free to contact Aspen Waite. We are here to help you navigate the complexities of tax laws and ensure you claim all allowable expenses.
Contact Us
- Email: bernard.critchley@aspen-waite.co.uk
- Phone: 01278 445151
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