What travel expenses can I claim?
If you are an employee and you pay for travel expenses that are necessary to do your job, you might be able to get tax relief. This is a complex area but we cover the main points below.
It is crucial to understand that the expense you incur travelling from your home to your main place of employment is called the cost of ordinary commuting and you will not get tax relief on those expenses.
You can read how to claim other employment expenses on our page ‘What if I incur expenses in relation to my job’.
Below we consider different types of travel expenses you might incur in relation to your job and comment, in particular, on expenses incurred by agency workers and those employed by employment intermediaries or ‘umbrella companies’.
What are permanent and temporary workplaces?
It is important to understand these two terms. Most workers will have no difficulty in identifying their permanent workplace: it is the place where they regularly go to work. It may be a factory, office, shop or somewhere else – but it is the place where the employer expects the worker to be. You might have more than one permanent workplace if you have two jobs, for example, or if your employer requires you to work in one location for two days a week and in another location for three days a week.
A temporary workplace is somewhere you would attend irregularly or for a limited period of time, certainly for less than 24 months. For example, if you normally worked in Birmingham, but your employer required you to work from a store in Leicester for a year, then that store in Leicester would be a temporary workplace.
You can read more about permanent and temporary workplaces on the HMRC website.
Ordinary commuting costs are the costs of travel between your home and a permanent workplace, or any other private travel. Ordinary commuting also includes the costs of commuting to other places that are not significantly different to the costs of commuting to a permanent workplace. For example, if you normally travelled 12 miles to work in a shop that is ordinary commuting. Similarly if you worked in another shop in a different location that was 10 miles from home, those costs would also be ordinary commuting costs.
You can read more about ordinary commuting costs on the HMRC website.
I am employed in the construction industry. Are the rules different for me?
There may be different rules for you if you are site-based – in other words you are employed in the building or construction industry and you are assigned to work at a particular site for a length of time governed by your employer’s contract there. Normally you would work at that site exclusively for that time and rarely visit the offices of your employer. Provided you are expected to work at that site for less than 24 months, your travelling expenses to and from home may be claimed as an expense for tax purposes.
You can read more about site based employees in the HMRC manuals.
I travel between clients. What costs can I claim?
Normally you would be able to claim the costs of travelling between the clients as a deduction for tax purposes. The exception would be if you had no regular workplace and your place of work was defined as a geographical area: in that case the whole area would be considered to be a permanent workplace.
Remember you may not be able to claim the costs of travelling between home and your first client nor between your last client and home as deductions for tax purposes if they would be considered to be ordinary commuting.
I have more than one job. Can I claim the costs of travelling between them?
An agency is an organisation that finds you work, but instead of you being employed by the businesses you ultimately work for, instead you are employed by the agency. The business for whom you carry out work pays the agency and they, in turn, pay you, after taking their fee.
When an agency finds you a job, that is treated as if it is an employment for you with a permanent workplace, thus meaning your travel to and from the job would be ordinary commuting.
Instead, if you are employed by the agency and move between different clients in a single day, for example, visiting them in their homes, then you would be able to claim tax relief on the costs of travelling between clients but not on travel to and from the first and last clients of the day.
An umbrella company is a company that employs you but relies on the agency to find work for you. As a result of you having a separate employment with the umbrella company, up to 5 April 2016 it was sometimes possible for all costs of travel, including home to work travel to be claimed as deductible from your taxable income. HMRC are opposed to such arrangements and intend to introduce legislation that will be backdated to 6 April 2016 to stop such arrangements.
An employment intermediary is a business that provides your personal services to another organisation, meaning that you would not be an employee of that other organisation, but instead be employed by the intermediary. An umbrella company is an example of an employment intermediary. From 6 April 2016, any home to work expenses incurred by the employee of such an intermediary will not be able to claim them as an expense for tax purposes.
I am employed by an umbrella company or employment intermediary. How does that affect which expenses I can claim?
Up to 5 April 2016 it was sometimes possible to claim all travel expenses in relation to your job, including home to work, as a deduction for tax purposes. From 6 April 2016, that is to be stopped.
Where can I find further information?
You can read more about employment expenses generally on our page ‘What if I incur expenses in relation to my job?’
You can read more about tax relief you may be able to claim if you use your car on our page ‘What if I use my own car for business purposes?’