Some workers are finding it difficult to afford the fuel or bus/train fare to travel to work. Employers may be tempted to help out by reimbursing those travel expenses.
Unfortunately, the journey between an employee’s home and their permanent work place is treated by HMRC as ordinary commuting. If the employer meets those travel costs for the employee, the payment must be taxed as salary under PAYE.
A tax-free mileage allowance (up to 45p per mile), or reimbursed expenses, can be paid where the employee travels to a temporary workplace in their own vehicle. This is somewhere the employee goes to perform a task of limited duration, or for some other temporary purpose.
An employee can have two or more permanent workplaces, eg both at their home and at the company’s office. If the individual is required to attend the office for certain periods, say one day a week, the office is also a permanent workplace.
Where an employee is based at home, as set out in their employment contract, but they are required to attend the office for specific meetings – the travel to the office for those meetings should be tax-deductible, so the employer can reimburse those travel costs tax-free.
Where the place the employee performs their duties has changed, the employment contract needs to be amended to make it crystal clear where the new permanent workplace for the employee is and whether the employee has two permanent workplaces.
We can help you design tax efficient ways to help your employees meet the costs of getting to work.
