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Change of Permanent Workplace - mileage allowance?

Change of Permanent Workplace - mileage allowance?

Our client moved from their permanent workplace to a new location 15 miles away over 2 years ago. To help the employees with the additional fuel expense they have given 20p per mile to each employee who this adversely affects.

I am struggling to find any HMRC guidance or legislation on this as the guidance seems to be geared towards the relocation of an employee rather than the relocation of the employer.

As journeys from home to a permanent workplace are disallowable for mileage purposes should our client be submitting P11D forms for each of the employees who this affects. Is there any guidance on allowances or exempt amounts/periods for when this change of workplace happens?

/TJ

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29th Oct 2010 10:12

Eh?

Are you saying that the employees submit expense claims to the company for the (additional) mileage from home to work?  If so, then too damn right, of course forms P11D are required.

Or is the employer paying the relevant employees a flat rate addition to their salaries based on their additional monthly mileage?  If so, the payment should be subject to PAYE.

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By TommyJ
29th Oct 2010 12:55

What currently happens

Currently there are no mileage claims submitted - they receive the same amount each month and have done so for over 2 years now. My gut feeling was the same - that if your employer moves to a new permanent location then 'tough' - if the employer recompensed the employee for this it was subject to going on to a P11D. However (I apologise for not putting this into the original question) - if you look at Booklet 490 and in particular Sections 4.6 - 4.9 Change of workplace there are a few confusing nuggets:

(1) "under the tax rules there is no change of workplace" - what tax rules in relation to the workplace?

(2) "employees entitlement to relief" - this suggests that relief is available if the employer changes location

(3) "applying the modification rule" - what is this modification rule to which they refer?

My reading of sections 4.6 to 4.9 suggest that some sort of relief is available for employer's to compensate their employees when the workplace changes - but it doesnt indicate what type of reliefs are available e.g. mileage allowance/cash sum etc.

I have spoken to 2 different Revenue 'assistants' on this - both had no idea about the above and both were adamant that the mileage should be taxed as a permanent workplace was mentioned. Then again, maybe Sections 4.6 to 4.9 may only apply to temporary changes (24 month rule) but this is not explicitly mentioned.

My head is officially pickled with this one.

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29th Oct 2010 16:13

I suspect this is being treated under the Temporary Workplace rules. However, since this was not a change to a temporary workplace, but rather a change of PERMENENT workplace, no allowance should be given. If the employer wishes to pay an additional increment to cover the additional costs, then that is liable for PAYE and NIC's. Despite the employer attempting to ring fence this money as separate and untaxed - it isn't. It's just more salary.

http://www.hmrc.gov.uk/manuals/eimanual/EIM32080.htm

 

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