UK: HMRC clarifies rules on tax relief for commuting costs for WFH employees.

HMRC has updated guidance on when tax relief is available on travel expenses for staff who work from home.

As a general rule, there is no tax relief for the cost of a journey which is ordinary commuting. Ordinary commuting means travel to and from a permanent workplace.  For hybrid workers, the issue is whether their home or their office should be considered to be their permanent workplace. 

As a result of the increase in flexible or hybrid basis working contracts, HMRC confirmed that ‘under such arrangements, the employee will have a base office and journeys from home to that location will be ordinary commuting.’ This means that trips to the office from the home base are not eligible for tax relief.  HMRC stressed: ‘We will not accept that working at home is an objective requirement of the job if the employer provides appropriate facilities in another location that could be practically used by the employee, or the employee works from home as a matter of choice.’

Whether or not an employee’s home is a workplace does not affect the availability of tax relief for travel expenses.  It does not mean that they will be entitled to tax relief for the cost of travel between their home and a permanent workplace, as where an employee lives will ordinarily be down to their personal choice.  The expense of travelling from their home to any other place is a consequence of that personal choice, not an objective requirement of the job.

Note that the situation is different if the homeworking arrangements are not voluntary. E.g. if the employee must work from home as a requirement of their job, they should be able to claim tax relief for expenses incurred travelling to their employer’s premises.

Tax relief will continue to be allowed for the travel costs incurred on travelling between an employee’s home and a temporary workplace.

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