For both travelling and subsistence expenses to be treated as an exempt expense, it is necessary to have been incurred in business travel. This is also the condition in the use of business mileage rates for cars and vans.
A business journey is one which either involves travel:
- from one place of work to another or
- from home to a temporary workplace or vice versa
However, journeys between an employee’s home and a place of work which he or she regularly attends are not business journeys. These journeys are ‘ordinary commuting’ and the place of work is often referred to as a permanent workplace. This means that the travel costs to a permanent workplace have to be borne by the employee.
The term ‘temporary workplace’ means that the employee attends the place for a limited duration or a temporary purpose. However, some travel between a temporary workplace and home may not qualify for relief. This is if the trip made is ‘substantially similar’ to the trip made to or from the permanent workplace. The HMRC considers as ‘Substantially similar’ a trip using the same roads or the same train or bus for most of the journey.
There will be many variations of types of journeys undertaken by employees so ensuring that it is a business journey is critical. More so as the term ‘travel expenses’ includes the costs of travel together with any subsistence expenditure and other associated costs that are incurred in making the journey (e.g. toll or congestion charges).
The new regime
Regardless of whether the employers use scale rates or specific reimbursement, the new regime requires them to have a checking processes in place. If there is a lack of evidence that amounts paid to employees represent business expenses, the business may incur penalties for errors in completion of P11Ds. In some cases, if the expenses are non-business expenses the employer may be responsible for PAYE and NIC underpayments.
