Treatment of commuting expenses

Produced by a Tolley Employment Tax expert
Employment Tax
Guidance

Treatment of commuting expenses

Produced by a Tolley Employment Tax expert
Employment Tax
Guidance
imgtext

Introduction

In order for travel expenses to be payable free of tax and NIC, they must meet definitions outlined in legislation. Ordinary commuting is, broadly, an employee’s travel between their home, or other place that is not a workplace, and their permanent place of work (see the Travel expenses for a definition of a permanent workplace). The phrase ‘ordinary commuting’ is used in the legislation; we’ll refer to it simply as commuting in this note. If an employee is reimbursed for expenses relating to commuting then these are taxable and NICable as a benefit. The employer should put the full amount of the expense through payroll subject to both tax and NIC.

Identifying commuting can be one of the most complex areas in employment tax. While it may be obvious what will be defined as commuting for a majority of employees travelling to work, such as when an employee travels to a single office every day, there are complex rules which govern what is commuting.

In addition, many employers will not have processes in place to identify

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+
  • 14 Sep 2022 11:06

Popular Articles

Class 1 v Class 1A

Class 1 v Class 1AClass 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met

Read more Read more

Enterprise management incentive schemes

Enterprise management incentive schemesWhat is an enterprise management incentive (EMI) scheme?The enterprise management incentive (EMI) scheme is a tax-advantaged share option employee incentive scheme aimed at small entrepreneurial companies that meet certain conditions. It is designed to assist

14 Jul 2020 11:36 | Produced by Tolley Read more Read more

Withholding tax

Withholding taxIntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeUK withholding tax may be reduced under the provisions of a double tax treaty (DTT). Prior to 1 June 2021, payments of interest and royalties made to EU resident associated companies were

14 Jul 2020 14:01 | Produced by Tolley Read more Read more