When travel qualifies for tax relief (490: Chapter 2)
What travel expenses qualify for tax relief.
What travel expenses are
2.1
The term ‘travel expenses’ includes the actual costs of travel together with any subsistence expenditure and other associated costs that are incurred in making the journey. The meaning of subsistence is covered in detail in paragraph 5.4 of The amount of tax relief (Chapter 5).
In most cases, tax relief is available for the full cost of business travelling expenses, except where motoring expenses are paid to employees who use their own vehicles for business travel, in which case special rules apply - go to paragraph 9.12 of Employers’ reporting requirements (Chapter 9).
Business travelling expenses are travelling expenses which are incurred on:
- journeys which employees have to make in the performance of their duties (travel in the performance of the duties)
- journeys which employees make to or from a place they have to attend in the performance of their duties (travel to a place where attendance is in the performance of the duties) – but not journeys which are ordinary commuting or private travel
2.2
Tax relief is available only where travel is in the actual performance of the duties or where it’s necessary – in a real sense – for the employee to attend the particular place on that occasion to perform the duties of their employment.
Travel in the performance of the employee’s duties
2.3
The sort of travel that qualifies for tax relief on this basis is travel that is ‘on the job’, as distinct from travel ‘to the job’. The most common example is travel between one workplace and another in connection with a single employment.
The cost of such travel is incurred in actually carrying out the duties of the employment, although the treatment may be different where one of the workplaces is the employee’s home.
For detailed guidance on when relief is available where the employee’s home is a workplace go to paragraph 3.36 of Ordinary commuting and private travel (Chapter 3).
Example
Amanda is a senior manager in a sales consultancy company. She manages teams in offices in Leicester and Nottingham and is regularly required to travel between the two. Tax relief is available for the full cost of the travel between the 2 workplaces because it’s undertaken in the performance of Amanda’s duties.
No relief is available for travel from her home to the offices or her return home from the offices as this is ordinary commuting (go to paragraph 3.1 of Ordinary commuting and private travel (Chapter 3).
2.4
Another example is where travel is integral to the performance of the duties. Typical examples are a commercial traveller, or a service engineer who moves from place to place during the day carrying out repairs to domestic appliances at clients’ premises. Such employees are sometimes described as having travelling appointments.
Example
Tony is a service engineer working for a company that services and maintains white goods for the commercial sector. He visits up to 10 customers each day throughout the UK. He has no normal workplace and is emailed his job list each evening for the following day.
Travel is an integral part of his job and he carries out the duties of his employment at each customer’s premises. Tax relief is available for the cost of all Tony’s business travel, including from his home to his first appointment and from his last appointment to his home.
Travel to a place where attendance is in the performance of duties
2.5
This category covers journeys an employee makes to or from a place they have to attend to carry out duties of that employment. Such places are referred to as ‘temporary workplaces’. This is explained at paragraph 3.13 of Ordinary commuting and private travel (Chapter 3), but a typical example might be where an employee has to travel directly between home and a client’s office.
It excludes journeys that constitute ‘ordinary commuting’ or ‘private travel’. The meaning of ordinary commuting and private travel are explained at paragraph 3.2 of Ordinary commuting and private travel (Chapter 3).
2.6
To get relief for the cost of travel, the employee’s attendance at the temporary workplace has to be necessary in the sense that it’s dictated by the requirements of the duties of the employment and not, in any way, by the personal convenience of the employee.
Similarly, an employer cannot turn an ordinary commuting journey into a business journey by asking an employee to stop off on the way to carry out business tasks such as making phone calls.
Paragraphs 4.3 to 4.5 of Safeguards against abuse (Chapter 4) explain this in more detail.
Example
Belinda is a purchaser for a major retailing company. Although she has a permanent workplace in Doncaster, she has to spend several days each month visiting suppliers all over the country, often travelling directly to and from home.
Tax relief is available for the full cost of her business travel to suppliers, but not for her travel to her permanent workplace in Doncaster because that is ordinary commuting.
Travel between employments
2.7
Generally, where someone has 2 employments, the duties of which are performed at different places, there is no tax relief available for the cost of travelling between those places.
But tax relief is available in the case of people who:
- hold employments with more than one company in a group (go to paragraph 2.8)
- hold employments with more than one associated company (go to paragraph 2.9)
- have more than one employment and the duties of one of them are performed wholly or partly overseas (go to paragraphs 7.4 to 7.7 of Special tax rules on foreign travel (Chapter 7)
Example
Ahmed has 2 separate employments. Each morning he travels from his home in Shepherd’s Bush to his job as a shop assistant in Central London.
Each evening he travels directly from that workplace to Fulham where he works in a bar. He travels home to Shepherd’s Bush at the end of the day. There is no tax relief available for the cost of Ahmed’s travel to and from or between his 2 jobs.
Travel between separate employers within a group
2.8
Someone who is an employee of 2 companies within a group of companies may be entitled to tax relief for the cost of a journey between workplaces for the performance of the duties of those separate offices or employments.
For this purpose, companies will be regarded as being members of the same group if one is at least a 51% subsidiary of the other, or both are at least 51% subsidiaries of a third company.
Example
Elaine is an employee of company A. She is also an employee of companies B and C.
Company A has a 51% holding in company B and a 51% holding in company C.
Tax relief is available for the cost of Elaine’s travel between various workplaces for the performance of the duties of the 3 employments.
Example
Christopher is an employee of company X and company Y and a director of company Z.
Company Z is an 80% subsidiary of company Y and company Y is an 80% subsidiary of company X.
Company X has no direct holding in company Z.
Tax relief is available for the cost of Christopher’s travel between company X and company Y and between company Y and company Z.
In each case, the direct 80% holding makes the companies part of the same group.
Tax relief is also available for the cost of travel between company X and company Z – although there is no direct holding, the indirect holding of 64% (80% x 80%) qualifies for the purpose of the group test.
Travel between linked employments
2.9
Someone who is a director of a company and who is also an employee of an associated company may be entitled to tax relief for the costs of travelling in the UK incurred on journeys between the workplaces of either of the companies for the performance of the duties of either employment.
For this purpose, company X is an ‘associated company’ of company Y if the employee of company Y was appointed as a director of company X because Y (or another company in Y’s group) has a shareholding or other financial interest in X.
Example
David is an employee of company A and a director of company B.
Company A has a 40% shareholding in company B and so has a place on B’s board.
Tax relief is available for the cost of David’s travel between his workplace with company A and his workplace with company B where his travel is made for the performance of his duties of either employment.
Joint projects
2.10
Two or more employers may act together on a particular project. Sometimes they’ll form a joint enterprise for this purpose. An employee of either of the employers, whose duties need them to act for the joint enterprise is entitled to tax relief for business travel.
Example
Bricks Inc and Mortar Inc work together on a project to build a new industrial development. They operate through a company Project Inc (set up solely for this purpose) in which they each have a 50% holding.
Claire is responsible for managing the project. At all times she remains and acts as an employee of Bricks Inc. Project Inc pays Bricks Inc for Claire’s services.
Claire is entitled to tax relief for the cost of her travel between Bricks Inc and Project Inc and between either of these companies and Mortar Inc – not because they’re members of a group (they’re not), but because she is travelling in the performance of the duties of her employment with Bricks Inc.