Are you unsure about if you can claim tax relief for commuting to a temporary workplace? Find out everything you should know by continuing to read below.
What do I need to know?
As you are probably aware, employees are not eligible to claim a tax deduction for the cost of travel between home and work. But you should know that there are some exceptions.
One of the main exceptions to the rule is where an employee must attend a ‘temporary workplace’ to perform a task for temporary purposes, even if it’s on a regular basis.
Steve works as a project manager. His office is based in Runcorn. Steve is required to visit a warehouse site in Liverpool to monitor his current renovation projects performance.
The warehouse is a temporary workplace so Steve would be able to get a deduction for travel expenses, even if he travels from home, as it is temporary for 12 months until the project is completed.
What is the 24-month rule?
A workplace does not count as a temporary workplace if the employee attends it for more than 24 months.
HMRC state that a period of ‘continuous work’ is where the duties that are performed at the location to a ‘significant extent’.
A significant extent is defined as when an employee spends 40% or more of their working time at the location.
If it is found that the worker does spend 40% of their time at the workplace for over 24 months, then it will be classed as a permanent location. Therefore, they will be unable to get tax relief for commuting as it is not a temporary location.
Sandra is employed full time as a care home manager in Manchester. She is sent to a home in the Wirral for three years to then return back to the Manchester care home.
Although, the move to the Wirral is not permanent it is longer than 24 months meaning that it does not qualify as a temporary workplace.
Therefore, Sandra is unable to get a deduction for her travel expenses.
Change of circumstances
It is common that there are changes in circumstances such as if a temporary post is extended so that it will last longer than 24 months. If this is the case, then the workplace will be classed as temporary until it has passed 24 months.
Fixed term appointments rule
If an employee has a fixed-term contract, then they are not eligible for relief for home to work travel costs, even if the contract is less than 24 months. This is because the employee attends the workplace for almost all of the contract period.
Jane is employed on a fixed-term 12-month contract at a bank in Birmingham. Although, the contract is for less than 24 months, the Birmingham office is not a temporary location, as jane works there for the duration of the contract.
If the employer pays or reimburses travel expenses which would be deductible if met by the employee, the payment or reimbursement is exempt from tax.
If you are currently travelling to a temporary workplace, then make sure that you are receiving the tax benefits that you are entitled to.
If you found this useful, please share it using the icons at the side of the page, or leave a comment below.
If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant
• You can ring us on 0151 380 8080
• You can email us at email@example.com