Tax Preparation Specialist Provides Guidance to Employers and Employees Handling Temporary Workplace Expense Claims
What makes a temporary workplace a temporary workplace as far as HMRC is concerned? Although for many the rules may seem pretty straightforward, tax preparation specialist David Redfern, Managing Director of DSR Tax Refunds Ltd, explains that it is not quite as simple as looking at how long an employee spends at any particular workplace and he provides guidance for both employers and employees to assist them in determining whether temporary workplace expense claims should be allowed.
When it comes to claiming expenses for travelling to a temporary workplace, both employers and employees alike will be aware of the 24 month rule. HMRC rules state that a workplace will be considered to be a permanent workplace if it is the basis of continuous work that lasts, or is likely to last, for 24 months or longer. Redfern explains further “HMRC states that an employee who works at a particular site for a limited duration of 24 months or less is classed as working at a temporary workplace and can therefore deduct their travel expenses as tax relief and for many employees and employers, it is as simple as that – however, as is often the case HMRC rules are rarely quite that straightforward and temporary workplace rules are just the same. Although the 40%/ 24 months rule is often bandied about – where an employee spends at least 40% of their working time at a particular workplace for a period not exceeding 24 months – there are other factors to be taken into consideration before allowing travel expenses to be deducted”.
The first consideration should be whether the temporary work location significantly changes the employee’s journey. Redfern states “If, for example, an employee is expected to work at a new location for 9 months, one would expect that to come under the 40/24 ruling – however, if that new work location is on the same road or very close to their original place of work, then HMRC would rule that there is no significant change to the employee’s journey to work and in particular, to the cost of that journey to the employee and therefore those expenses would not be deductible even though the employee would argue that it is a temporary workplace”. As a result of this HMRC ruling, an employee who works at a succession of different workplaces but who suffers no significant impact on their commute or the cost of their journeys to and from work will not be entitled to claim travel expenses under the temporary workplace rules even though they meet the criteria of “limited duration”.
In order to provide a safeguard against abuses of the expense rules, HMRC has a number of other tests that an employee must meet to be able to claim temporary workplace expenses. Redfern explains “Due to the complexities of working practices, HMRC has issued a series of tests to help affected workers determine whether the temporary workplace rules apply to them. Fixed term appointments are generally treated as a permanent workplace, even if the appointment is for less than 24 months, so workers who have a fixed term employment of 18 months, for example, would not normally be entitled to tax relief on their mileage expenses where this appointment was deemed to be a “separate employment”, meaning agency workers and the like would not be able to claim for their mileage. Similarly, the depots and bases test prevents workers for claiming expenses for trips to a depot or a permanent work base that they regularly attend or are assigned routine tasks to perform there. Where an employer is assigned a particular geographic area, for example a salesperson who is assigned a particular county cannot claim for journeys within that county – as far as HMRC are concerned, that whole area would be treated as a permanent workplace under the terms of their employment”.
In order to ensure that expense claims are HMRC compliant, Redfern advises both employees and employers to familiarise themselves with HMRC’s rules with regard to what does and does not comprise a temporary workplace, stating “although most cases will be pretty clear cut as to whether they are temporary or not, it is those tricky grey areas where caution should be taken before allowing such expense claims. HMRC’s guidance provides plenty of examples to help assist you to determine how the rules should be interpreted”.
About DSR Tax Refunds Ltd
DSR Tax Refunds Ltd are a firm of tax rebate specialists serving clients nationwide. DSR Tax Refunds are tax preparation experts who specialise in identifying potential allowable expenses for tax rebates for clients. Their specialist team can help employed and self-employed subcontractors with all relevant paperwork to ensure their claim is handled in an accurate and efficient manner.
For more about DSR Tax Refunds, visit https://tax-refunds.co.uk/
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