The company I work for has hired a new employee to work at 3 locations, as a shop manager:
FarAwayTown: Mondays (32% of working hours)
HeadOffice: Wednesdays (30%)
TownNearHeadOffice: Fridays and Saturdays (39%)
The hiring manager agreed with the new employee that, when he works in FarAwayTown, we will pay him for the extra miles he travels, compared to when he works at HeadOffice. Which, after all, sounds reasonable to a layman, particularly as the employee was accustomed to doing just that when we previously engaged him on a self-employed basis.
Unfortunately HMRC's "Booklet 490 - Employee travel: A tax and NICs guide for employers" has got me going round in circles.
In favour of paying his mileage expenses tax free:
- the employee spends less than 40% of his time in FarAwayTown, so this could be a temporary workplace.
- it could be argued that the task he performs is of limited duration – he acts as manager for 9 hours; anything he does not do is picked up by a different manager the next day; and he has no ongoing staff management responsibility.
I think these arguments are in line with paragraphs 3.10, 3.16, and 3.22 and example "Edward":
"Example Edward lives and works in Portsmouth where he is employed as an engineer. His employer sends him to work in Southampton for 11⁄2 days a week for 28 months. For the rest of the week he continues to work in Portsmouth which remains a permanent workplace. In considering whether Edward is entitled to tax relief for travel between home and Southampton it is important to look at the amount of time he expects to spend there each week and for how long he expects to be in Southampton. Because he expects to be in Southampton, for less than 40% of his working time, albeit over a period longer than 24 months, and he retains a permanent workplace in Portsmouth, Southampton is a temporary workplace for Edward and he is entitled to tax relief for the cost of getting there and back."
However, paragraph 3.43 " People with more than one workplace at the same time" is giving me problems. It says "Someone who has 2 or more employments or is in an employment which requires regular attendance at more than one workplace, may have more than one permanent workplace during the same period. Example John is a mortgage adviser employed by a chain of building societies. He works 5 days each week but spends each day in a different branch in a different town. He works in the same branch on the same day each week. John is not entitled to tax relief for his travel from home to any of the branches. That is because he travels regularly to each branch and his work is neither of limited duration nor for a temporary purpose. So each branch is a separate permanent workplace."
John's work is apparently not of limited duration, which make me doubt whether our manager's is too (and Edward, in the first example). Perhaps the difference is that John's work is not picked up by a different advisor the next day?
Finally, against the payment of expenses tax-free, is the following paragraph:
3.44 Most employees will not have more than one permanent workplace at the same time. Each case will depend on the particular facts. The sort of things that would point to a workplace being a second permanent workplace include:
• the employee regularly performs a significant part of their duties there (YES)
• people would expect to be able to contact the employee at the second location (YES)
• the employee has an office, or desk, and support services at the second workplace which he or she regularly uses (YES)
• the employee performs similar tasks at each workplace (YES, FOR THE 2 SHOPS; NO FOR HEAD OFFICE)
• the employee does not attend the workplace solely to do specific tasks such as attendance at a specially arranged meeting (see paragraph 3.13) (CORRECT)
So I am completely confused. I have tried our employment solictors, but they were clueless and said "refer to his contract" (which is silent on the subject) and were rather surprised that there might be any guidance from HMRC on the subject.
I am strongly discouraged from asking our external accountants anything at all, because they are extremely expensive (being London-based specialists)
So my gut feeling is we need to pay him mileage as this was agreed between him and his hiring manager – the question is whether or not the payment is tax-free.
Please can anyone help? And thank you for reading.