If your employees feel that travelling to the workplace is unaffordable, then why not, as an employer, reimburse travel expenses? This could help prevent creating a tax burden for your employees and yourself.
When Does Commuting Become A Tax-Deductible Expense?
Most of the time, the travel between an employee’s home and their permanent workplace is seen as ordinary commuting and is not a tax-deductible expense. If the employer pays the employee a mileage rate or even reimburses bus or train fares for this ordinary commuting, then that payment must be taxed as salary under PAYE.
Reimbursed public transport costs and a tax-free mileage allowance can be paid when the employee travels to a temporary workplace. This is a workplace where an employee goes to perform a task that is of limited duration or another temporary purpose, such as a care worker travelling to their client’s home. However, keep in mind that if a workplace cannot be proven to be temporary, then it is always a permanent one.
Some employees may have two or more workplaces, such as at home or the company’s office. If they are required to attend the office for specific periods, such as one day a week, then both the office and their home are considered permanent workplaces.
What To Change On An Employees Contract
Suppose an employee contract states they are based at home but should travel to the office for certain situations, such as specific meetings. In that case, the travel to the office these days is tax-deductible, and the employer can reimburse the travel costs.
Where an employee’s workplace has changed, such as their home, their employment contract must be updated. Update the location of the new permanent location and whether the employee has to travel between two permanent workplaces.
We are always here to help you ensure that any assistance given to your employees meets the tax legislation requirements.