The current income tax rules for business travel have not changed a great deal since 1998. Within the current system there are two main rules in relation to business travel;
- The first rule allows you to claim tax back against business travel undertaken in the performance of the duties of your employment. In other words this rule allows you to claim tax relief for business travel which forms an intrinsic part of your job, such as travel undertaken by a lorry driver, a travelling salesman, or a utility meter reader. This can also include journeys between multiple workplaces.
- The second rule allows you to claim tax relief for necessary journeys to workplaces that you have to attend for work – although this excludes the cost of ‘ordinary commuting’.
‘Ordinary commuting’ is defined as being journeys between your home (or somewhere that is not your workplace) and a ‘permanent workplace’. ‘Permanent workplace’ in this situation is defined as being a workplace which you attend regularly and which is not a ‘temporary workplace’. There are several rules in place to determine wither or not your workplace qualifies as a temporary workplace. The main tests are;
- whether you are attending the workplace location for a limited duration (i.e. a temporary purpose)
- whether you perform, or expect to perform, your duties to a significant extent at the workplace location (in other words, whether over 40% of your working time is spent at a given location)
- whether you attend, or expect to attend, the workplace location for more than 2 years.
Further detailed guidance on the above tests can be found on our website. The HMRC guidance booklet for employers relating to these tests (“490: Employee travel”) can be found here and the HMRC manual for employee travel (EIM32000 – travel expenses) can be found here.
When one of you journeys qualifies for tax relief, you will also be entitled to claim tax back against any allowable subsistence expenditure which is incurred on that journey. This includes;
- any necessary subsistence costs incurred in the course of the journey
- the cost of meals necessarily purchased whilst you were at a temporary workplace
- the cost of the accommodation and any necessary meals where an overnight stay is required as part of your journey.