With employees’ and directors’ P11d’s for 2021/22 due by 6 July 2022 it is timely to remind employers of the rules for travel and subsistence, particularly as HMRC have recently issued some updated guidance and useful examples of their interpretation of the law.
Tax relief for employee travel costs is available provided the journey isn’t ordinary commuting or private travel. Thus, amounts paid by the employer would not be taxable. However, if an employee is using their own transport HM Revenue & Customs issue approved mileage rates to use.
No relief is available for ordinary commuting, which is travel between home (or a place that is not a workplace) and a ‘permanent workplace’.
There are a number of criteria for determining if a workplace is temporary or permanent, but in general a workplace will always be a permanent workplace if the worker:
- regularly goes to the same workplace in the course of a period of continuous work which lasts or is likely to last more than 24 months, or
- regularly goes to the same workplace for all or almost all of the time for which the worker is likely to hold (or continues to hold) the same employment.
Where the journey qualifies for tax relief then necessary and reasonable subsistence costs associated with that journey would also qualify for tax relief, and if paid or reimbursed by the employer would not be taxable employment income.
Thus, amounts paid by the employer would not be taxable as long as HM Revenue & Customs’ approved mileage rates are used.
