Commuting Expenses for Hybrid Workers

Overview 🚃

With the rise of hybrid working the tax treatment of travel expenses has become more nuanced.

HMRC’s latest guidance clarifies how to distinguish between ordinary commuting, business travel, and what constitutes a permanent or temporary workplace. Understanding these distinctions is crucial for employers and employees to avoid unexpected tax charges.

🔍 Permanent vs Temporary Workplaces

Permanent Workplace

A permanent workplace is a location an employee attends regularly for their normal duties. Travel between home and a permanent workplace is classed as ordinary commuting, which means:

• Employees cannot claim tax relief on this travel.
• Any reimbursement from the employer is treated as taxable income.

Temporary Workplace

A temporary workplace is one that an employee attends for a limited period or specific project. Travel to a temporary workplace can qualify for tax relief if:

• The employee attends the location for less than 24 months.
• The assignment is genuinely temporary, not recurring or ongoing.

💡 Example:

If an employee is seconded to a client’s site for six months, travel costs to that site may qualify for tax relief.

🏠 Hybrid Working and Travel Expenses

For hybrid workers, eligibility for travel expense relief depends on who decides where work is carried out.

1. Employee-Choice Homeworking

If an employee chooses to work from home for convenience, their home is not considered a workplace.

• Travel from home to the office is ordinary commuting.
• Any employer reimbursement of these costs is taxable.

This applies even if the employee works from home regularly - unless the employer formally requires it.

2. Employer-Mandated Homeworking

When an employer requires homeworking (for example, under a contractual hybrid policy), the home may be treated as a workplace.

• Travel from home to other business sites may then qualify for tax relief.
• Relief applies only for days when the home is a recognised workplace under the terms of employment.

💡 Tip: The distinction hinges on employer control. HMRC will look for evidence that homeworking is directed by the employer, not simply agreed for convenience.

🔗 HMRC: Hybrid and Homeworking Travel Guidance

📄 Documenting Workplace Arrangements

To support any tax claims or relief:

• Clearly document hybrid working arrangements in employment contracts or company policy.
• Include which days are designated for office or homeworking.
• Retain records of travel claims, expense reports, and meeting schedules.

This documentation provides evidence of workplace status, which HMRC will rely on when determining whether travel qualifies for relief.

💡 Updating employment contracts to reflect formal hybrid arrangements helps protect both the employer and employee if HMRC reviews expense claims.

✅ Summary

• Home-to-office travel is usually ordinary commuting and not tax-deductible.
• Travel to temporary workplaces can qualify for tax relief if the assignment lasts less than 24 months.
• If homeworking is employer-mandated, the home may be treated as a workplace for certain journeys.
• Always document hybrid arrangements and keep supporting records.