HMRC has updated its guidance to clarify the tax position of reimbursed travel costs for hybrid workers.
Travel to work on office days will still be regarded as normal commuting
As many employees are now working from home at least part of the time, some employers are offering to repay certain travel expenses. HMRC’s updated guidance includes new examples to illustrate when those costs are deductible and when they are not. Reimbursed travel expenses can be deducted if the employee is obliged to incur and pay them and the expenses are attributable to the employee’s necessary attendance at any place in the performance of the duties of the employment.
This does not apply where the expenses are incurred in ordinary commuting, defined as travel between the employee’s home and a permanent workplace; or a place that is not a workplace and a permanent workplace. Introducing a hybrid working arrangement may result in a change to an employee’s permanent workplace for tax purposes. This is not necessarily the case and where employees are still required to spend some days in the office the permanent workplace is unlikely to change to the home. Travel to work on office days will still be regarded as normal commuting with any reimbursed costs subject to tax and NIC.
Where there is no longer an office to travel to or the employee is 100% home-based the home may be treated as the permanent workplace.