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Dog out the car window AccountingWEB Reimbursing the ride: HMRC updates commuting guidance
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HMRC updates WFH commuting guidance

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As employers push for office working, employees are pushing for their commuting expenses to be covered. Amy Chin looks into HMRC's updated guidance on reimbursing travel costs and what this means for hybrid workers.

26th Apr 2024
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The post-pandemic period brought fewer permanent changes to daily life than many predicted. Air travel has returned to pre-pandemic levels, handshaking, hugging and air-kissing are back and facemasks are a rare sight.

One thing that does seem to have stuck, at least in part, is the rise in home or hybrid working. The suitability of a work-from-home (WFH) model for businesses in the accountancy sphere was recently covered by AccountingWEB columnist Philip Fisher here.

Attendees of the Festival of Accounting and Bookkeeping were treated to a debate between the Association of Taxation Technicians' Emma Rawson arguing for WFH and the Chartered Institute of Taxation's newly appointed vice president, Paul Aplin on the side of office working. The undeniable benefits of WFH at least some of the time (with the obvious exclusions for job roles where this is not possible) led Aplin to jump ship almost immediately and the crowd voted unanimously for hybrid working.

Recruiters are increasingly hearing from candidates that flexible or hybrid working is a non-negotiable with 100% office-based roles turned down without consideration.

The Flexible Working Bill gained royal assent in July 2023 and became an Act of Parliament on 8 April 2024, giving millions of people across the UK (England, Scotland and Wales) the right to request working arrangements that will fit around their other needs and commitments.

As employers start to require their staff to return to the office at least some of the time, several have reported being asked to cover commuting costs on those days. This is of course a decision for the individual business or employer, with many factors to consider, not least the tax implications for travel expenses claimed.

Cost of commuting

Travel expenses per HMRC's guidance can include:

  • public transport costs;
  • hotel accommodation if you have to stay overnight;
  • food and drink;
  • congestion charges and tolls;
  • parking fees; and
  • business phone calls and printing costs.

Whatever the business decides, HMRC's position has not changed. To avoid confusion, they have updated their guidance: Ordinary commuting and private travel (490: Chapter 3) with a new section added at 3.39 to clarify the tax position on any potential reimbursement of such costs for hybrid workers.

According to the Income Tax (Earnings and Pensions) Act 2003 deductions from taxable earnings are allowed for travel expenses if:

  • the employee is obliged to incur and pay them as holder of the employment; and
  • the expenses are attributable to the employee’s necessary attendance at any place in the performance of the duties of the employment.

However, this does not apply where the expenses are incurred in ordinary commuting, defined as:

  • the employee’s home and a permanent workplace, or
  • a place that is not a workplace and a permanent workplace.

Home is where the work is

Introducing a hybrid working arrangement may result in a change to an employee's permanent workplace for tax purposes. However, this is not necessarily the case and where employees are still required to spend some days in the office, the permanent workplace is unlikely to change to the home.

Travel to work on office days will still be regarded as normal commuting with any reimbursed costs subject to tax and NIC.

HMRC has made this position clear in section 3.39 and added a new example:

Example 42 — employees who work at home

“Elliot’s employer has decided to offer hybrid working to its employees. This allows employees to mix working at home with working in the Bristol office. This flexible way of working is voluntary for Elliot, so he is not required to work from home as part of his role.

“Elliot decides to split his time between working at home and in the Bristol office. Elliot’s office will remain his permanent workplace when he begins to work in a hybrid way. This means Elliot cannot claim tax relief on journeys made from his home to the office because such journeys are ordinary commuting.”

Blurred lines

Where there is no longer an office to travel to, or the employee is 100% home based, the home may be treated as the permanent workplace. This blurring of the boundaries between work and home does not change the rules on tax relief for non-work purposes. For the avoidance of doubt, the guidance clarifies this at 3.40:

“An employee is not entitled to tax relief for journeys between their home and any other place attended for reasons other than work, even when home is a workplace. Such travel is private travel.

“Tax relief will of course be allowed for the costs incurred on travelling between the employee’s home and a temporary workplace.”

Further guidance on expenses that can be claimed for employees working all or some of the time from home can be found on Gov.uk.

Replies (14)

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By FactChecker
26th Apr 2024 13:03

"As employers start to require their staff to return to the office at least some of the time, several have reported being asked to cover commuting costs on those days" ...
... is that true or just a bit of journalistic licence to connect two unrelated strands here?

I'm honestly interested.
I talk to a LOT of ERs (and many EEs), from those in Whitehall and major conglomerates to local pharmacies/restaurants/et and all points in between, and have NEVER encountered that request.
Moans a-plenty, particularly with regard to the proportionally higher cost of public transport when it is not pre-paid via a full season-ticket, but 'pay my commuting costs'?!?
Apart from anything, why is it the ER's 'fault' that an EE chose to live miles away?

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Replying to FactChecker:
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By FactChecker
26th Apr 2024 13:30

The heart of the 'updated guidance' isn't actually a change at all, merely HMRC re-emphasising what they've always maintained that:

* where employees who sometimes WFH are required to spend some days in the office, travel to work on those days will be regarded as normal commuting.

What they haven't made clear is whether there has been a change in their underlying reasoning ... which used to be, in essence, that an employee can have more than one concurrent workplace - and that (with a couple of exceptions relating to temporary jobs) travel between two workplaces is commuting.

They also appear to have not re-emphasised the 'choice' element that was deemed so essential when considering a WFH 'allowance' ... i.e. if boss A says 'work in office on Mon & Fri but the rest of week work from home' then Tue-Thu is allowed for WFH 'allowance'; whereas if boss B says 'work in office on Mon & Fri but the rest of week work wherever you want (incl the office)' then Tue-Thu is NOT allowed for WFH 'allowance'.

Is there anything to report on these aspects?

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Replying to FactChecker:
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By Yoyo29
29th Apr 2024 12:16

I have a couple of clients whose hybrid employees repeatedly asked for their commuting costs to be reimbursed for the one to two days a week that they're required to go into the office. I have spent too many times explaining to the clients that the reimbursements would be treated as earnings and would have tax and NI deducted. Both clients ended up giving into the employees requests because they didn't want to risk losing their employees. The employers said they knew of other companies in their industry that pay their employees' commuting costs to entice them back into the office.

Interestingly enough, some employees eventually stopped submitting the commuting reimbursements when they noticed that there wasn't much leftover after tax and NI was deducted.

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By luciencciphr
29th Apr 2024 17:29

The EE hasn't always chosen to live miles away.

Under the lockdowns, some companies reached out and hired 100% remote workers. They had the whole of the UK to recruit from, rather than just the locality.

Now these companies are asking the employees to visit the main office, and as they are travelling in from the provinces, the return train ticket can reach into hundreds of pounds. Quite often the EE made sure any travel was included in their contract.

Can if be stated that someone who has been recruited by a south east (or other remote location to them) company, now is choosing not to leave their home of decades and have to move hundreds of miles just because the remote company has now chosen to demand a day or two in the office?

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Replying to luciencciphr:
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By bendybod
30th Apr 2024 09:47

The employee can still have the travel reimbursed - just not tax free.

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Replying to bendybod:
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By MScott_1
30th Apr 2024 10:43

bendybod wrote:

The employee can still have the travel reimbursed - just not tax free.


I think that’s just pure extortion. Similar to the kind you see at knife point. This is because the money reimbursed should not be treated as earnings especially if the agreed normal place of work between the employee and the employer is the employee’s home. It is cost that would not normally be incurred in the employee’s normal working day. Why tax it? That’s just broad day light extortion if that’s the case and by a government department also. That’s irksome. I am hoping this is not the case.
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Replying to MScott_1:
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By FactChecker
30th Apr 2024 18:02

Paying your taxes equates to extortion at knife point?
There's hyperbole, and then there's just pure fantasy.

"Why tax it?"
Why tax anything? Do you really need a lecture on how nations function?

FWIW taxing reimbursement by ER of commuting costs has always been the case (including all the definitions, rules and exemptions - but that's tax law for you).
Why are you so focussed on this aspect ... why is tax levied on various benefits provided by an ER? Indeed why is tax deducted from the EE's earnings?

Thanks (5)
Replying to FactChecker:
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By MScott_1
30th Apr 2024 18:20

FactChecker wrote:

Paying your taxes equates to extortion at knife point?
There's hyperbole, and then there's just pure fantasy.

"Why tax it?"
Why tax anything? Do you really need a lecture on how nations function?

FWIW taxing reimbursement by ER of commuting costs has always been the case (including all the definitions, rules and exemptions - but that's tax law for you).
Why are you so focussed on this aspect ... why is tax levied on various benefits provided by an ER? Indeed why is tax deducted from the EE's earnings?


No it's not the same as paying your taxes. You pay taxes on earnings. Even you of all people ought to know that. What is earnings in receiving reimbursement for something that would not normally be a cost in an employee's normal working routine? How is that earnings? An employee's normal place of work is the home but then when they make the odd travel to the business premises, and by odd travel I mean circa 2 days per month, you are actually arguing publicly for the reimbursement of the expenses incurred in the process to be taxed? No wonder there's so much confusion in Government processes if people like you argue like this.

Unless you're actually saying that HMRC have accounted for this and people in those circumstances do not get their reimbursed expenses taxed, which I may have missed, you fail to realize that to say that it is an extortion at knife point is to accord it with adoration.

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Replying to MScott_1:
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By gillybean04
01st May 2024 01:53

If someone attends a workplace once a week is that not a normal workplace? But more pointedly, is it a permanent workplace? Is it travel for the necessary attendance at a temporary workplace or is there travel in performance of the duties?

If the job was advertised as remote and the employer is seeking to change the terms then that sounds like a question for employment lawyers.

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Replying to FactChecker:
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By MScott_1
30th Apr 2024 07:06

“Why is it the ER’s fault that the EE “chose to live miles away”. Really? Is this a serious question by someone in the UK or a joke? First of all EEs would love to live within walking distance of their jobs. Go and ask any EE and they’ll tell you. But the harsh economic reality is that some people live in areas of low economic activity and moving may not be an option yet to be considered. Moreover ER’s may be in search of the right candidate for the role. If such a one happens to live far away, why won’t the ER incur the cost of getting them? Especially if they can. And why will the Government (HMRC) be concerned with the business of shutting that down and making the life of such people difficult? What’s the driver? HMRC ought to be concerned about collecting taxes not punishing people for having circumstances beyond their control. I don’t understand why this is even a debate.

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Replying to MScott_1:
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By FactChecker
30th Apr 2024 17:51

You missed 1st April, so I have to presume that you think you're making sense?

Do you know what a strawman argument is (as you're managing to demonstrate it)?
Who mentioned 'within walking distance of their jobs' - not me, or anyone else.

Anyway, the bit that you seem to have missed is that "life's not fair" ... the human condition is learning to adapt, making compromises and taking responsibility for your own decisions.

In my (50+ years of working) life, I have turned down jobs that paid better if they didn't suit me for any reason (including travel) and accepted jobs that involved a pay cut (if I liked something about the company/people/ethos or indeed nearby location).
One of my own 'rules' was to never accept a job that required more than 30 mins each way of commuting (sometimes buses, maybe a motorbike but never a car).

And yes that sometimes meant my family 'went without', and my only pension now is the SP, but all choices were made by me - not expecting state assistance.

FWIW (strawman 2): "If such a one happens to live far away, why won’t the ER incur the cost of getting them?"
There's nothing to stop an ER paying whatever they want to attract/retain an EE, but there are rules of taxation (just like rules of criminal law or even rules of social inclusion) and of course they apply.
So the business isn't 'being shut down', it's just subject to taxation like all the rest of us - or do you claim there's a 'special case' here that you've failed to explain?

The only thing on which we're likely to agree is your parting shot ... it isn't a debate, it's just facts and that's life!

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Replying to FactChecker:
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By MScott_1
30th Apr 2024 18:38

FactChecker wrote:

You missed 1st April, so I have to presume that you think you're making sense?

Do you know what a strawman argument is (as you're managing to demonstrate it)?
Who mentioned 'within walking distance of their jobs' - not me, or anyone else.

Anyway, the bit that you seem to have missed is that "life's not fair" ... the human condition is learning to adapt, making compromises and taking responsibility for your own decisions.

In my (50+ years of working) life, I have turned down jobs that paid better if they didn't suit me for any reason (including travel) and accepted jobs that involved a pay cut (if I liked something about the company/people/ethos or indeed nearby location).
One of my own 'rules' was to never accept a job that required more than 30 mins each way of commuting (sometimes buses, maybe a motorbike but never a car).

And yes that sometimes meant my family 'went without', and my only pension now is the SP, but all choices were made by me - not expecting state assistance.

FWIW (strawman 2): "If such a one happens to live far away, why won’t the ER incur the cost of getting them?"
There's nothing to stop an ER paying whatever they want to attract/retain an EE, but there are rules of taxation (just like rules of criminal law or even rules of social inclusion) and of course they apply.
So the business isn't 'being shut down', it's just subject to taxation like all the rest of us - or do you claim there's a 'special case' here that you've failed to explain?

The only thing on which we're likely to agree is your parting shot ... it isn't a debate, it's just facts and that's life!

What happened on 1st April? In the absence of that knowledge, I am making a serious point and I am convinced I am poking pressure points given your long response.

You cite life as being unfair as the main point I have missed but what if I said that was nonsense? I guess it would be an opinion until we look at the facts. Life is very fair. Every person receives what they have earned. That's the nature of the world. That's fair. What's not fair is trying to extort taxes from people on monies that they have not earned; on actual expenditure. That, my friend, is the very epitome of unfairness.

You also talked about your rules of engagement with an ER and how it meant your family had to go without as though it were a benchmark of living. In the spirit of fairness, if you can afford to make your household go hungry and you all can bite the dust no problem. What then gives you the impression that it is also good for someone else? Whatever happened to the idiom that one man's meat is another man's poison? Where is the logic or sense in your admonishment?

Even the tax laws you boldly lambasted us with here appear to be engrained with a philosophy of fairness. For if it were not so, everyone will be taxed the same.

But to argue publicly that it is fair to stretch taxes for earnings to taxes for unusual work related expenditure as well, is garnished with all sorts of things that are unlawful for the fingers to type.

Your kind of rhetoric and philosophy is the cause for the problems in the world, including some of the ones we face and as a country we need to be at the forefront of the rectification and not the perpetration.

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By FactChecker
26th Apr 2024 13:14

Some of the copy'n'pasting from "Guidance: Ordinary commuting and private travel (490: Chapter3)" seems to have got a bit mangled ...

Article above says:
"However, this does not apply where the expenses are incurred in ordinary commuting, defined as:
* the employee’s home and a permanent workplace, or
* a place that is not a workplace and a permanent workplace." ??

vs the original:
"The term ‘ordinary commuting’ means any travel between a permanent workplace and:
* home
* any other place which is not a workplace"

To be fair that synopsis is over-simplified (hence the 43 pages taken to explain it all properly), but at least it makes sense.

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By abelljms
29th Apr 2024 20:46

It's funny how HMRCy in section 3.40 they didn't give another example :-

M Assive Group plc has told all it's serfs in Department W Orky Ournut Zoff they must work from home using Employer provided equipment, as the former office they toiled in has been closed. However, instead an alternative facility has now been provided where staff can come in when they like . - Can the staff claim their occasional travel costs to the new hotdesky office?

Why is everyone always one-sided/biased rather than even-handed?

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