HMRC Travel Expenses & Temporary Workplace Rules

HMRC travel expenses temporary workplace


Employees who travel for work purposes may be eligible for tax relief on travel expenses that are not reimbursed by their employer.

The general rule is that travel expenses between an employee’s home and workplace are not allowable under HMRC rules, while expenses for travel between the employee’s home and a temporary workplace may be allowable, providing certain conditions are satisfied.

In this guide for employers, we outline HMRC’s rules on claiming tax relief for travel expenses to temporary workplaces and explain the so-called ’24-month rule’.


Claiming tax relief on travel expenses

The Income Tax (Earnings and Pensions) Act 2003 (ITEPA) states that in order for a travel expense to be allowable, it must satisfy one of two tests:

  • It is “necessarily incurred in the performance of duties” (ITEPA s.337)
  • The travel is “for necessary attendance” (ITEPA s.338)

Additionally, the employee must be “obliged to incur and pay them as the holder of employment” (ITEPA s.337(1)(a) and 338(1)(a)).

Generally speaking, there is no tax relief available to employees for the costs of “ordinary commuting”. This has been defined as travel between the employee’s home and permanent place of work.

However, there are journeys which are made in the “performance of duties”, which can include trips between the office and another work location, such as visiting a client or customer or other “temporary workplace.” An example of this might be a solicitor visiting clients at home or attending court.

The word “temporary” is important here and has a specific meaning in tax law that is not the same as the ordinary, natural meaning of the word. HMRC describes a temporary workplace as being where employees are required to undertake any work at another location for a temporary purpose as part of their “core” employment.


Temporary and permanent places of work

Most employees have no problem identifying their permanent place of work because it is the place they regularly go to work. Perhaps it is an office, factory or retail outlet, but notably it is the venue the employer expects their employee to be. Some employees may have more than one permanent work venue, for example if their employer requires them to work in more than one location.

A temporary workplace is classed as a location where the employee attends irregularly or for a limited amount of time. For example, an employee who works in Leicester is required to work in Nottingham for a year. The Nottingham location would be classed as a temporary workplace under the rules.

However, the temporary workplace rule ceases to apply if the employee works at an alternative location for a continuous period of work over 24-months. This is known as the 24-month rule. The law defines a period of continuous work as a period during which the employees’ duties are performed to a meaningful extent at a particular workplace.

HMRC considers duties are performed to a meaningful extent if the employee spends 40% or more of their time at that workplace. Complications can arise where employees spend less than 40% of their time at a temporary workplace as to whether the 24-month rule applies. It may be wise at that point to seek advice from an accountant as to the particular circumstances.


The 24-month rule

This is a specific condition that allows employees to claim travel expenses for journeys between the employee’s home and their temporary workplace. The idea is that visiting somewhere other than a permanent workplace can lead to undue costs for the employee. HMRC views travelling to a temporary workplace as a legitimate business expense.

The 24-month rule has two notable conditions which must both be met in order for an employer to NOT be eligible to claim travel expenses:

  • The employee must have spent or is likely to spend more than 40% of their working time at a work location, AND
  • The employee must attend or be likely to attend the venue for a period lasting more than 24 months.

If both of these criteria are met, the employer cannot claim tax relief on travel expenses to and from a place of work. So, if the employee spends more than 40% of their time at a work venue for over 24-months, HMRC class it as a permanent workplace.

As soon as the employer knows a contract will last longer than 24-months, they must stop claiming tax relief. This means that if the employer knows the contract at the alternative location will last at least two-years, they cannot claim from the start.

24-months is the total calendar period, and not the actual amount of time the employee spends working at the location. For example, if the employee works for two days a week commencing on 1st January, or if they work six-months on and then six-months off, they will reach 24 months on 1st January two years after. This continues to be the case even if new contracts are signed along the way.

In the example given above, the 40% rule would still apply. So a break of 15-months (60% of any two-year period) would be sufficient to make sure the 24-month rule does not apply.
If the contract length is unclear, tax relief is available if it is assumed the agreement to work at the temporary location will not last more than 24-months.

As it is possible to have more than one permanent workplace, if the 24-month rule is met, the workplace is automatically deemed permanent, even if the rule can also be met in other work locations.

Tax relief is not available for private travel. This is defined as travel to any place that an employee does not need to be for work purposes.


Qualifying travel expenses

The 24-month rule prevents receipt of tax relief on travel expenses to temporary workplaces. But in order to claim tax relief, the employee must have had to incur the travel expenses in the first place.

Travel expenses for employees are tax deductible when certain conditions are met:

  • Employees personally pay their own expenses receiving no reimbursement from their employer
  • The employer reimburses any travel expenses paid for by the employee
  • The employer pays the costs directly on the employee’s behalf
  • The cost is met by travel tickets or credit tokens provided to the employee
  • Travel facilities, such as accommodation, are provided directly to the employee.

Travel expenses include the actual cost of the journey and all other associated costs such as food, accommodation, toll fees, car parking, taxis or vehicle hire charges.


Which travel expenses are allowable?

Site-based employees

This is a category of employee who carry out their duties across several sites and means their place of work does not readily fit neatly into the definition of what is and what is not a temporary workplace within ITEPA guidelines. Each site must be examined on the facts and a determination made as to whether they are temporary or permanent sites. If it is deemed to be permanent, then under the rules, travel expenses are not allowable.


Ordinary commuting

Travel from home to a place of work is not allowable for tax purposes unless it meets one of the listed exceptions. If an employee is on secondment, their travel expenses may be allowable, but so long as an employee has chosen where they work (e.g., not on secondment) and choses where they live, there is no tax relief for the costs of travelling to and from work.


Travel cards

The underlying requirement of the expenditure must be considered, simply because an employee uses their existing rail season ticket for visiting a client utilising the same ticket, does not make part of the ticket’s cost allowable. However, if the employee is required by their employer to incur a higher level of expenditure above their ordinary commute, then the extra amount is allowable.


Accompanying spouses

If the employee’s spouse accompanies them, then those expenses are generally not allowed, unless the spouse’s travel meets the requirements. This is whether the travel expenses have necessarily been incurred for the purposes of the employment or are incidental to it. Such situations are rarely encountered, and more general reasons for spouses to travel are more likely to arise from attending particular functions, where the employee’s requirement to attend on their own is not enough. If an employee is travelling overseas, then the additional costs of their accompanying spouse may be allowable.


One-off visits

If an engineer has to visit a customer to check some equipment, for example, the travel costs are allowable. Employees who are required to visit customers or suppliers, attend training events, meetings or perform other visits expected of their role, then travel expenses are allowable.


Travel obligations

For those employees who are required to travel between work locations as part of their employment, travel costs are allowable.


Area employees

If an employee is responsible for an area over which they perform their duties, the travel costs within that area are allowable.


Travel between group employments

Where the employee is employed by a group of companies (holding company and 51% of subsidiaries), the directors or other employees may have to travel between locations to carry out their duties. Those employees are entitled to deductions for the cost of travelling to the other group companies for that purpose. The rules surrounding group companies are technical and complex, so it may be sensible to read through HMRC travel expenses temporary workplace guidance, if there is any doubt.


Level of reimbursement

If an employee is reimbursed excessively for their expenses, it will give rise to one of two situations:

  • If the employer reimburses expenses above the level of expenditure incurred by the employee, then the excess must be treated as earnings and included in payroll.
  • If the employer reimburses expenses for particularly lavish or extravagant travelling arrangements, it may result in a benefit charge on the employee.

However, if the employee has incurred extra or additional expenses which have not been reimbursed by their employer, then the employee can claim relief. For example, if the employee has been reimbursed £150 towards a £200 train fare, the employee can claim tax relief on the excess £50. This is either done via the employee’s tax return under “employee expenses”, or, if the employee is not required to complete a tax return, they can claim relief on form P87, an excess expenses form.


Breaks in attendance or location

A break in attendance or location, however long or short, does not reset the clock. If the employee is returning to a previous place of work, time continues to run. This is because 24-months is the total calendar period, and not the actual amount of time the employee spends working at the location.

The 24-month rule clock can be reset provided there is a significant change in the commute or location. HMRC does not define what amounts to a significant change, so employers will need to determine this on a case-by-case basis. Resetting the 24-month rule only applies to limited companies that intend to be at a location or venue for over 24 months.

If this is the case, the employee can then revert to the 40% rule, which requires determination as to the length of time they will be away from that location in order for them to claim in the future.


HMRC 24-month rule & travel expenses rules FAQs

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Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal or financial advice, nor is it a complete or authoritative statement of the law or tax rules and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission.

Before acting on any of the information contained herein, expert professional advice should be sought.


Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.

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