Written by Ray Coman
Provided a journey is for a business purpose and is not considered to be ordinary commuting, the travel costs can be deducted from taxable income. Ordinary commuting is defined as travel between permanent workplace and a non-workplace. Typically, the non-workplace place of departure is the home.
In general, a permanent workplace is a location where employment duties are carried out for a time of continuous work which lasts, or is expected to last, more than 24 months.
Continuous work is carried out at any place in which more than 40% of working time is spent. The percentage is based on the number of hours that are worked in all places, such that a part time worker would exceed the limit working fewer hours at a given workplace than a full-time worker.
Even if a place is visited for more than 24 months, provided the time spent at that location is less than 40%, it will not be regarded as a permanent workplace for tax purposes.
A workplace is not permanent where the contracts lasts and is expected to last, less than 24 hours. This applies even where more than 40% of working time is spent at that workplace.
Commuting costs will be disallowed from the date that the expectation of employment duration exceeded 24 months. In this case, commuting costs would be disallowed from the date that the contract went permanent.
Nothing is in writing, but it seems as though my job is now permanent, are my travel costs still tax deductible?
An expectation that the contract is indefinite is normally established by a written contract. However, an expectation for contract length to exceed 24 months could be established by deeds rather than words. For instance, relocating to be nearer a new workplace could indicate an expectation that the workplace is permanent. Regardless of expectations, a workplace will become permanent once it has lasted more than 24 months. If a contract term is defined as less than 24 months, there would be a significant practical obstacle for any third party to prove that a longer duration was expected.
Where the term is, or is expected to be, indefinite it is of unlimited duration. Consequently, travel costs are treated as commuting from the outset.
Where the work is expected to last for more than 24 months, but it turns out lasting for a period shorter than 24 months, the travel to this workplace is still commuting for tax purposes.
Section 339(3) ITEPA 2003 defines a permanent workplace as one which is not visited for a temporary purpose. HMRC interpret a purpose as not temporary if the task performed are self-contained. The visit is for one particular reason rather than for an ongoing task.
Can I get tax relief for the cost of temporary accommodation which is nearer to my permanent workplace?
No. Travel from any place that is not a workplace to the permanent workplace is commuting. Commuting for tax purposes is defined by the destination rather than the place of departure.
Unlikely. Employment earnings are subject to UK tax for non-residents. As explained above, commuting is established where the destination is a permanent workplace. The distance travelled does not alter tax treatment.
No. The cost of private journeys are not tax deductible. A private journey is a trip to or from any place that an employee does not have to be at for work purposes.
Provided the travel to the workplace is for a temporary purpose, tax relief can be obtained even if it is not for a temporary duration. A person can travel to a workplace for more than 24 months, however provide the duration is only temporary it does not become a permanent workplace.
I work from home, so home is my permanent workplace, what travel costs are tax deductible?
This is a grey area. Most likely, less than 40% of the time is spent away from home, and therefore other workplaces are attended to for a limited duration. However, it will be harder to prove that the visit to the workplace away from home was for a temporary purpose. If the place is visited for a specified one-off task defined in advance it will be temporary. If it is for an ongoing task with no set end date, it is unlikely to be temporary. If attendance is part of the employment contract, it will not be temporary. In practice, temporary purpose is harder to disprove than is a limited duration. The regularity and frequency of visits are likely to be persuasive. Work patterns typical for a certain role in a certain industry could be helpful in deciding.
Yes. By exception, a permanent workplace is not the client’s home. Therefore, regardless of duration or purpose of the visits, travel costs will be fully allowable for domestic services, such as those of being a nanny, carer, cleaner or masseuse.
Yes. Even if an emergency or outside of contracted hours, the journey is made to a permanent workplace and therefore its costs are not tax deductible.
A self-employed person does not have an employment workplace, but can still have a permanent workplace as defined in this report. Therefore, travel can still be considered to be commuting and therefore not tax deductible. It is in the nature of self-employment to have many clients or paymasters. Therefore, a sole trader is less likely to commute, however costs of any commuting would be denied tax relief.
It often confusing to decide whether travel expenses are tax deductible, however the tax implications can be significant. At Coman & Co Chartered Tax Advisers, we can implement our knowledge to ensure that our clients pay the least tax within the bounds of what is allowed.