A common question we’re getting asked here at Darwin Gray LLP at the moment is whether employees should be allowed to claim expenses for travelling between their home and their employer’s office. With the surging price of fuel, the question is becoming ever more pressing.
The first, and most important thing to say, is that whatever your approach or policy on this issue is, it’s vital that you write your policy down, communicate it to staff and apply it consistently. Getting the language of that policy right is tricky, but when it’s done properly, it can save you no end of problems down the line. Above all, avoid ambiguity and inconsistency.
The contract is key
Many of the problems we see with employer clients at the moment stem from the fact that employees’ employment contracts don’t necessarily match the reality of the way employees work. For example, if an employee has become a hybrid worker, it’s crucial that the employment contract is varied to reflect that. The common approach to take with a hybrid worker is to state in the contract that the employee has 2 places of work; the worker’s home and the employer’s workplace or office.
What about the tax side of things?
Whilst we’d always advise employers to take specialist tax advice, below is the basic position.
First, we must understand how HMRC defines for “permanent workplaces” and “temporary workplaces”. They do so as follows:
- “Permanent workplace” – somewhere an employee attends regularly to perform work. Regular attendance means attendance that’s frequent or which follows a pattern – e.g. once a week. Where an employee spends 40% or more of their working time at a workplace over a period of 24 months or more, HMRC will consider it to be a permanent workplace.
- “Temporary workplace” – somewhere the employee goes temporarily or infrequently just for a limited duration.
If a worker works from home full-time…
And then travels to their employer’s office, they can get tax relief on the travel cost of travelling to that office – assuming that the office is a “temporary workplace”.
If a worker splits their time between home and an office…
They will have 2 permanent workplaces and won’t get tax relief on the travel cost of travelling from home to the office.