October 29th, 2012 / Insight posted in

Tax relief on travel costs

PS writes: I want to relocate one of my offices 50 miles away. Our mileage policy is based on what the taxman will allow, so employees need to deduct home-to-work mileage from any claim where they go from home direct to a customer’s premises. The office move will slash the amount my employees can claim for some journeys, which may make them reluctant to visit certain customers. What exactly do the tax rules allow us to pay for business journeys?

There are detailed rules on the allowance of mileage and other travel and subsistence costs, writes Jon Sutcliffe, partner at Kingston Smith LLP. Employees are entitled to relief on the full cost incurred when travelling during the course of their work — as long as the journey is not ordinary commuting or private travel. There is no relief for these.

Your enquiry suggests that your office is the permanent workplace but that, on occasion, your employees travel to customers. Where an employee drives to the office and then goes out to see a customer, the home-to-office journey will not qualify for relief because it is ordinary commuting. Subsequent travel from your office to customers’ premises will count as business travel and relief will be available.

Where an employee goes straight from home to visit a customer the whole journey counts as business travel. A notional mileage to cover the journey from home to your office need not be deducted. This applies even if the journey passes your office, provided that the employee does not stop at the office.

It seems you may not have been paying quite as much as you could within the taxman’s guidelines. If you have adequate supporting documentation, you could consider making additional payments for past travel or, if the amounts are significant, your employees could make their own claims for relief to HM Revenue & Customs.