The rise of hybrid working—splitting time between home and the office—has created new questions about tax relief for travel and subsistence expenses. While these costs were once straightforward (and typically ineligible for relief), the shift to homeworking blurs the lines between “ordinary commuting” and deductible travel.
So, can employees claim tax relief for travel costs under hybrid working arrangements? Let’s explore.
The Rules on Travel and Temporary Workplaces
Under s337-339 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), employees can claim tax relief for travel and subsistence expenses if they are required to travel to a temporary workplace.
A temporary workplace is defined as:
- A location where the employee works for a limited duration or a temporary purpose.
- A place where the employee spends less than 40% of their working time over a period of 24 months or less.
For example, if an employee works two days a week in the office (40% of their working time), the office could be classed as a temporary workplace, potentially allowing tax relief on travel and subsistence costs.
What Does HMRC Say About Hybrid Working?
HMRC’s Employment Manual (EIM32065) supports the idea that a temporary workplace is somewhere an employee attends for a task of limited duration or temporary purpose.
However, hybrid working complicates this:
- Voluntary vs Compulsory Homeworking:
HMRC’s example under EIM32174 suggests that if working from home is voluntary, travel to the office is considered ordinary commuting, and claims are disallowed. This raises the question of whether claims might be valid for employees required to work from home under compulsory arrangements. - Specific Purpose Visits:
If office visits are for a specific reason, such as a sales meeting, this could support the argument that the office is a temporary workplace. HMRC guidance (EIM32150) states that visits arranged for a particular reason, rather than as part of a routine series, are more likely to qualify for relief.
HMRC’s Stance on Travel Claims
While there is some scope for claiming travel expenses under hybrid working, HMRC remains cautious. The general position is that:
- Homeworking is often voluntary: HMRC argues that most employers provide sufficient facilities for work on their premises, meaning homeworking is a choice rather than a necessity.
- No tax relief is available: Whether travel costs are paid by the employee or reimbursed by the employer, HMRC typically considers these costs non-deductible.
This stance is reinforced by updated HMRC guidance (EIM01471), which outlines when tax relief may apply to expenses or benefits incurred while homeworking.
Practical Points to Consider
- Employer Policies Matter: The distinction between voluntary and mandatory homeworking is critical. Employers should clearly define whether homeworking is optional or required.
- Keep Records: Employees claiming travel expenses should document the purpose of their visits to the office to support any potential claims.
- Expect HMRC Scrutiny: Given the growing prevalence of hybrid working, HMRC is likely to scrutinise claims for travel expenses more closely.
How Can Jon Davies Accountants Help?
Understanding the nuances of tax relief for travel and subsistence costs in hybrid working arrangements can be challenging. At Jon Davies Accountants, we can help you:
- Assess whether travel to the office qualifies as a temporary workplace.
- Advise on best practices for documenting and claiming expenses.
- Ensure compliance with HMRC’s guidance while maximising legitimate tax relief.
💡 Contact Jon and the team today for expert advice on travel claims and homeworking expenses.
What questions do you have about travel claims under hybrid working? Let us know—we’re here to help!
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