Qualifying expense claims

General
Receipts
Currency Claims
HMRC's Travel and Subsistence Rules

Appendix I: Definitions
Home
Allowable Business Journey
Permanent Workplace (PW)
Temporary Workplace (TW)
Ordinary Commuting Journey (or "home to work" travel)
Reimbursement Rule
Site Based Staff

Non-Business Journeys
Between Home and Your Permanent Workplace
No Genuine Business Reason
Similar to Ordinary Commuting Journeys
More than one Permanent Workplace
Area Based Workers
Application of the "Area Based" Approach

The "24 Month Rule"

General

Receipts

You should keep a VAT receipt to support all claims you make. Claims for parking meters, toll booths, bicycle mileage and PIES are the only exceptions to this rule. Mileage claims should be accompanied by related petrol receipts, (even though the petrol cost and mileage claim will not match).Top

Currency Claims

Claims for expenditure in a foreign currency should be completed in the local currency and the exchange rate received. Top

HMRC's Travel and Subsistence Rules

The principle on which the rules operate is that "allowable" business journeys and expenses attract tax relief so that they are not taxed. Where tax relief is not available, any amounts paid are subject to tax. The National Insurance treatment broadly follows the tax treatment. If you do not comply with these rules, the consequences may be:-

You may have to pay more tax than you should
You may incur tax and penalties which could have been avoided. Top

Appendix I - Definitions

To help you to understand the rules, you should acquaint yourself with the terminology given below. Top

Home

Where you normally live - the place from which you usually start your journeys. It may also be another place, which is not a workplace, e.g. a relative's home, if your journey starts there. Top

Allowable business journey

For tax and National Insurance purposes, an allowable business journey is one for which there is a "genuine business reason or purpose". They include journeys you have to make in the performance of your duties to and from places you have to attend in the performance of your duties provided the journey is not "ordinary commuting" ie the journey between your home and a permanent workplace. Journeys between locations which are defined as being "permanent" or "temporary" workplaces are normally allowable. Top

Permanent workplace (PW)

A place where you regularly attend for the performance of your duties of employment. This definition includes somewhere you may attend frequently or where your attendance follows a pattern. Within the company, the definition includes a base from which an employee works or a place where he/she is routinely allocated tasks. Top

Temporary workplace (TW)

A place where you go to perform a task of limited duration or for a temporary purpose. Examples of such tasks include maintenance or repair work at a customer site, or attending a meeting. Even if you attend a workplace regularly, it will still be classed as a temporary workplace if you attend to perform a task of limited duration or other temporary purposes. There is no limitation on the number of temporary workplaces an individual may have - examples include locations such as a client's offices elsewhere or other offices of any other company. If you regularly attend a temporary workplace for up to 24 months, you may still be eligible to claim tax relief. Top

Ordinary commuting journey (or "home to work" travel)

This term refers to any travel between a permanent workplace and home, or any other place which is not a workplace - for example, a relative's home. No claim can be made for ordinary commuting journeys. Top

Reimbursement Rule

If you travel direct from your home to a temporary workplace (and/or return), the mileage you can claim is the total distance travelled provided your journey is not "substantially similar to ordinary commuting" - see ‘Non Business Journeys' section. Journeys between temporary and/or permanent workplaces are usually allowable in full. Top

Site Based Staff

The term "site based" refers to staff who are working at a temporary workplace, such as a customer site, for up to 24 months. After that time, they may move to another site, or return to a permanent workplace. The tax rules relating to site based staff are explained in the ‘Non-Business Journeys' section below. Top

Non-business journeys

Any journey between home and your permanent workplace

No claim should be made as this is an ordinary journey - for which no tax relief is available. Similarly, no claim can be made for any additional journeys between home and the permanent workplace, for example, at weekends or outside the normal working hours. However you will not be considered to be area-based (see following) if you have a permanent workplace and the normal rules apply. Top

Any journey for which there is not a genuine business reason

Whilst at a temporary workplace, you may decide to make a private journey, for example, visit a local supermarket during lunch break. As the journey to the supermarket does not have a genuine business reason, that mileage must be excluded from your expenses claim. Similarly, you may decide to visit a relative on the way home from a temporary workplace. The mileage involved in making the diversion must not be claimed. Top

Journeys which are "substantially" similar to ordinary commuting journeys

Tax relief is not given for journeys between home and temporary workplaces, which are near to the permanent workplace i.e. where the journey is "substantially" the same as your ordinary commuting journey. Broadly, a temporary workplace must be at least 10 miles away from your permanent workplace for the journey to qualify as a business journey. Top

Employees with more than one permanent workplace

Most employees will have only one permanent workplace, but HMRC may consider that an employee has a second permanent workplace if:-

The employee regularly performs a significant part of his/her duties there;
Other staff would expect to contact the employee at the second location;
The employee has an office, desk and support services at the second workplace which he/she regularly uses. Top

Area based workers

Some employees work as area based staff - for example, customer service representatives and directors. Their duties are defined by reference to a geographical area and HMRC regard the whole of the geographical area as their permanent workplace. Top

Application of the "area based" approach

Mileage payments for travel within the area are not taxable. This includes those journeys starting at home where the employee lives within the area. However, for someone living outside the area, only business mileage within the area can be claimed. Travel between home and the area boundary cannot be claimed as tax free mileage. Top

Secondments and transfers - the "24 month rule"

If you are working away from your permanent workplace or if you are based at customer sites you may claim your journeys between home and that site as business travel provided it is expected that you will visit any particular site for less than 24 months and, in fact, do so. As soon as you expect to spend more than 24 months at any one site you must contact us for further guidance. The new "24 month" rule applies in these situations:-

Employees based at a customer site
Provided that at the start of a posting from a permanent to a temporary workplace, it is known that the placement will not exceed 24 months, expenses and business mileage can be paid tax free (subject to the 10 mile rule above).

Exception:
Where an employee spends the whole period of their employment at one temporary workplace, HMRC will seek to establish this workplace as a permanent workplace. As a result all travel from home to site will be retrospectively treated as private mileage, with tax and NIC applied. Top