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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
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Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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We are relocating employees to a new office about 50 - 60 miles

Customer Question

We are relocating employees to a new office about 50 - 60 miles away. We want to pay them a reasonable travel allowance base on the additional miles they will have to drive. What is reasonable and how will HMRC treat these payments?
Submitted: 2 years ago.
Category: Employment Law
Expert:  Ben Jones replied 2 years ago.

Ben Jones :

Hello, my name is Ben and it is my pleasure to assist you with your question today.

Ben Jones :

What do you hope to achieve please?

JACUSTOMER-ym5e6i2f- :

We want to ensure that we are treating the employees fairly whilst ensuring that any re-imbursement is within HMRC guidelines.

Ben Jones :

OK, thank you, please leave this with me - I will look into this for you, get my response ready and get back to you on here. No need to wait around and you will get an email when I have responded, thank you

JACUSTOMER-ym5e6i2f- :

Will I still get a response - I have paid my deposit??

Ben Jones :

Hi, thanks for your patience and of course you will get a response, which is coming up now.

When you compensate employees for business travel, you must ensure it is a reasonable amount, which is not too high to be considered as part of their earnings and taxable.

HMRC does not actually accept that travel from home to the workplace is a valid business journey and subject to tax-free compensation. Therefore, regardless of the move, if you start paying a set and long-term benefit to compensate them for the increased travel, if that is to cover their journey from how to the workplace and back, it will be seen as a taxable benefit.

The full guidance on business travel expenses can be accessed here:

http://www.hmrc.gov.uk/helpsheets/490.pdf

You will see that generally increased travel expenses will only be covered if the move was of a temporary nature, which is defined as lasting no longer than 24 months. So if the move is permanent and you know that it is going to last for more than 24 months, it will not be covered by the tax-free exemption and even though you are of course free to pay them compensation, it will be treated as earnings and be subject to tax and NI. You will see the relevant examples on page 12 of that document.

Ben Jones :

Hello, I see you have accessed and read my answer to your query. Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this?

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