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Tax rebate on travel expenses

Tax rebate on travel expenses

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Our client gets paid a per diem disturbance allowance, this is included in his taxable pay. This amount is to cover any and all expenses relating to having to work away from his normal workplace. He then pays his own costs of travel out of that.

There is no question that his place of work qualifies as a temporary workplace and HMRC have not queried that, they have however stated that they will not issue a repayment we have claimed on his tax return as he has been reimbursed for his travelling costs. It is our position that as his reimbursement is included in his taxable pay he is entitled to a tax rebate on the actual costs of travel.

Have HMRC got a leg to stand on? I am convinced that by both the letter and the spirit of the law that he is entitled to this rebate as he has effectively been taxed on money he has not received but I'm concerned perhaps I've missed something, would be interested to know people's thoughts one way or the other.

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By Accountax
22nd Sep 2015 16:49

Not a single solitary leg

Your client receives taxable income the fact that it is intended to cover the costs of travel and subsistence does not alter that fact.  Applying tax and NIC is simply a recognition that the amount of travel is not known at the outset and the employer doesn't want to face the risk of over paying a tax free expense but does want to give an advance against the costs.  Tax legislation clearly shows that qualifying travel and subsistence is a tax deductible cost.  Therefore your client is entitled to tax relief against any qualifying expenses.  s336 -339 ITEPA 2003 applies.  If HMRC don't want to understand the rules then escalate matters.  I can't help but wonder why your client's employer doesn't want to operate tax free reimbursal of expenses either under a dispensation or using the agreed tax/NIC free rates for mileage and subsistence.  Is his travel covered in any other way such as a fully expenses car?

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By Duggimon
23rd Sep 2015 10:41

Thanks for your reply

The employer I think has a large number of employees at various different locations who move between temporary workplaces and I expect the administrative overhead of collating and checking expense claims is impractical for them so every employee in this position is paid the same amount as taxable pay and can settle the matter directly with HMRC. This is only my assumption though, I should add.

Our client owns the car he used for the entire time and the expenses claim is purely for mileage at the standard rates, I have no idea why HMRC have suddenly decided the claim is not valid. Thanks for your response, I was so baffled by HMRC's reply that I thought I must have been missing something but it seems not.


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