If you work under PAYE (not self employed) you can claim tax relief on travel and subsistence expenses you incur as part of your job.
Of course, it’s not as straightforward as simply filling in a yes/no type form. We have to follow HMRC’s regulations which are subject to interpretation dependent upon each individual’s situation.
These tax laws are written in a language that looks familiar – but words and phrases are assigned very specific and unique definitions by HMRC. It is important to consider each of these rules as they apply to your employment and decide which one’s entitle you to a PAYE expenses tax rebate.
The rules on travel and subsistence expenses when you are employed.
What you definitely cannot claim for…
So, let’s get the bad news over with first! You cannot claim for:
- Your ordinary daily commute from your home to your permanent workplace, regardless of working hours.
- Any interest on a loan to purchase your vehicle.
- Capital allowances to buy a vehicle.
What is a ‘business journey’?
Any expenses you can claim for must be solely part of a business journey. HMRC has two possible definitions for this:
- If your job demands you to travel to a workplace that is not a usual, daily commute. This must not be a personal choice of place and must not be anything to do with private travel arrangements.
- If your work requires you to move between locations as part of your job description.
Mileage allowance
This applies to usage of private cars, vans or motorcycles that you use to travel for work. HMRC has decided a figure that they consider to be an ‘approved payment’ to cover mileage costs and this is what you can claim back, regardless of the actual amount you have paid. Anything you get over the approved amount is taxable and not eligible for a tax rebate.
If your employer does not pay you the full approved mileage allowance, or pays you and the allowance is taxed, or you don’t get any at all, you can claim up to the full approved payment amount. This stands even if you did not actually pay the approved payment amount. Guess it’s a case of ‘you win some, you lose some’!
Temporary Workplace
A workplace is considered to be ‘temporary’ if you work there for less than 24 months and you spend less than 40% of your work time there. HMRC call this a workplace that you attend “for a limited duration” or “for a temporary purpose”. If your daily journey fulfils these criteria then you can make a claim for your costs.
Permanent Workplace
As already stated, your usual daily journey from home to work is not considered a business journey. However there are a couple of instances in which you may have eligible travel costs.
- If part of your job is providing an emergency call-out service then you may be able to claim the cost of certain journeys. If you start working before embarking on the journey, then you are allowed to claim travel costs. For example, if you are giving medical advice to a client over the phone as you are preparing to leave for your workplace in response to that call.
- If you undertake infrequent journeys from home to a different place in the fulfilment of your duties then you can claim the actual travel expenses you pay. Don’t get too excited – the added proviso is that the journey must be “significantly different” to your usual commute.
Travelling is your job!
If travel is a defining feature of your job then you might be able to make some claims for business travel expenses. But definitions are important again here. Your ‘workplace’ becomes the physical area in which your responsibilities lie.
Therefore your ‘ordinary commute’ is considered to be from your home to the edge of that mapped area.
For example, if you are a regional manager, your commute is from your house to anywhere up to the boundaries of your region. Leaving you unable in some cases to claim the travel costs as a business expense.
Subsistence Costs
A ‘subsistence’ cost basically means food and accommodation expenses that arise from business travel. So, if your journey falls into one of the ‘business travel’ categories above, then you can also claim a “reasonable” amount for your meals and hotel bills.
There are some other business travel outlays that are considered, such as business calls. But there are very strict rules about entirely personal expenditure like newspapers, phone calls home and laundry – all things that are definitely not allowable.
Subsistence evidence
- Keep a record of all your business travel journeys – just a note in your diary will suffice. Also record how much your employer pays you in allowances.
- Keep all receipts for mileage, subsistence items and any other costs you think are business expenses. This evidence will strengthen your claim.
Tony Shanks