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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have recently taken a Job. The employment contract specifies

Customer Question

I have recently taken a Job. The employment contract specifies my office location is my home. The office is 160 miles away.

As part of my normal duties, I need to travel to our customer offices mainly in the UK but also throughout Europe. I also visit the head office regularly.

I need to understand the circumstances where the travel to the head office may be classed as a normal commute. I will be spending the first 2 months more time in the head office staying at a local hotel while I go though induction, but afterwards the visits will be occasional depending on the demands that are required of me.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

As an employee you may only have one place of business, that is standard employment law. Your employer has decreed that this be your home. Therefore any travel you undertake on your employer's behalf constitutes business travel and travel and subsistence costs allowable against Income Tax. By defining your home as your place of employment the concept of commuting does not rear it's ugly head. As you are probably aware commuting is not allowable against Income Tax.

Of course, if your employer meets these costs either by paying you an allowance for example for mileage or by paying your hotel bills and air fares etc you have no sums to offset against tax. Any motor mileage paid, usually by so much per mile, can also be the subject of an additional claim through your annual self assessment return to bring your recompense up to 45p per mile for the first 10000 miles and 25p per mile thereafter plus 5p for any authorised passenger.

I do hope I have thrown some light on your situation.
Customer: replied 3 years ago.

Thanks for your response. However looking at HMRC there appears to be rules around 40% of time or more spent at the office or if its not temporary i.e. 2 years then it becomes a taxable benefit.


 


I need to know under what circumstances, i.e. thresholds i need to be aware of before it is seen as a taxable benefit.


 


Hope that makes sense?

Expert:  bigduckontax replied 3 years ago.
Yes, but in your question you say you travel extensively on behalf of your employer 'and visit the head office regularly.' From that I assumed, not unreasonably, I think, that such visits are only a small proportion of your time.

I do accept that for the first 2 months you will be at the head office rather more than normal, but 2/12 is only 17%! You have another nearly 3 months to hang around the head office until you reach the 40% level. EIM32080 is pretty clear on this matter viz:

'The test is whether the employee has spent, or is likely to spend, 40% or more of his or her working time at that particular workplace over a period that lasts, or is likely to last, more than 24 months. Where that is the case the workplace is not a temporary workplace and so it is a permanent workplace. Travel between that place and home will be ordinary commuting and so is not deductible.'

Of course, if you do breach the 40% level then the whole ball game changes and commuting kicks in as an activity and, as I have told you, is not allowable against tax.
Customer: replied 3 years ago.

Thanks, that helps. For clarity, the 40% rule is measured over a 24 month period as you show using EIM32080?

Expert:  bigduckontax replied 3 years ago.
Correct, so you have bags of time to ensure that you don't breach it! Good record keeping will help you in this matter.

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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.