Travel and subsistence

The rules on tax relief for travel and subsistence are completely different depending on whether you are Selfemployed or are an employee (or director) of a company. It is easy to misunderstand them, as has been shown in two recent cases at the First-Tier Tribunal (FTT).

The Self-employed case (Hamish Taylor v HMRC (TC07893)) concerned a contractor based in Melrose in Scotland, who undertook various assignments in Swindon (for higher pay rates) and based himself there for several months. HMRC denied relief for his hotel costs in Swindon and his travel costs from Scotland.
The Tribunal held that staying in Swindon for some 165 nights during the tax year meant that his base for the work on a variety of sub-contracts was in Swindon. The disputed expenses were effectively general commuting costs for this Swindon work and so were disallowed.

Had he gone to Swindon for a specific contract, the travel and accommodation costs would probably have been deductible, as his base of operations would have still been his home in Scotland, even if the engagement in Swindon had lasted several months.

The employee case (Narinder Sambhi v HMRC (TC07717)) concerned a worker normally based in Birmingham who was sent to work at various locations in London for a period of several years, travelling home at weekends. He believed that each site qualified as a temporary workplace, so claimed relief for his travel and subsistence. He had not worked at any of the sites, individually, for more than 24 months, the statutory limit for a workplace to be regarded as temporary under the rules for employees.

The FTT found that the journey times to each site from his accommodation in London differed by no more than half an hour and the cost varied by no more than £14, so (in the Tribunal’s view) the change of worksites was not substantial. His work at various sites in Greater London should therefore be treated as one workplace, which had become a permanent workplace after 2 years. The total expenses disallowed were over £20,000.

Whether you can get tax relief on expenses is often a significant factor in deciding whether to take on new Selfemployed work far from home or, if you are an employee, in deciding to agree to a secondment.

Please speak to us to get clarity on what are often complex rules, ideally before you take on such assignments.