A look at travelling expenses

The tax office is currently attacking travelling expenses, so we thought it time to have a look at these. In the space available we can only skim the surface of this topic. We will have a more in-depth look at this in our next newsletter. If you want to receive this then go to our website www.warringtonaccountants.co.uk and register to receive our newsletter.
If an employer reimburses travelling expenses to an employee then, unless a dispensation has been received, that reimbursement must be reported to the HMRC and this then forms part of the employees remuneration, and is therefore taxable, unless the employee is able to claim a deduction.
A deduction can only be claimed where the travelling expense is incurred:
-Either in actually carrying out the duties of the job;
-Or where it is necessary for the employee to attend that particular place on that particular occasion to perform that particular task.
The best way to illustrate this is with a few examples.
Not surprisingly, ordinary commuting is not deductible. This is because the expense is incurred not in performing the job but in putting the employee in a position to perform the job. Similarly, if someone has more than one employment and travels directly from one to the other then that cost is not deductible. One exception to this, however, is where the two employments are with companies within the same group.
But what if the employee arranges a business appointment on the way to work? Does that change the journey from ordinary computing into business travel and, therefore, deductible? Not if the purpose is just to get relief. There must be a real need for the employee to attend the appointment at that time. Similarly, stopping to make a business phone call would not succeed in creating a tax deductible expense.
Travelling to a permanent workplace is not deductible. A permanent workplace is one where an employee regularly spends, or is expected to regularly spend, 40% or more of their time in one workplace for a period exceeding 24 months. This, however, is not as straightforward as it at first appears.
A workplace may be considered a permanent workplace even when attendance is less than 24 months if that period of attendance is the whole of, or substantially the whole of, the period of employment. On the other hand, a workplace which is regularly attended for a period exceeding 24 months may still be considered a temporary workplace if each attendance is self-contained and of a temporary nature.
This is only scratching at the surface of this topic. If you want more information then register for our newsletter.
WatkinsonBlack are pleased to advise on these as well as other matters, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us.
Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.