Travel Expenses for Hybrid Workers
Overview 🚃
With the rise of hybrid working, the tax treatment of travel expenses has become more nuanced.
HMRC's guidance requires employers and employees to distinguish between ordinary commuting, business travel, and what constitutes a permanent or temporary workplace. Understanding these distinctions is important to avoid unexpected tax charges and ensure expense claims are treated correctly.
🔍 Permanent vs Temporary Workplaces
Permanent Workplace
A permanent workplace is a location an employee attends regularly as part of 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 usually treated as taxable income.
A workplace can still be permanent even if attendance is infrequent.
Temporary Workplace
A temporary workplace is a location an employee attends for a limited period or specific purpose, such as:
- A project
- A secondment
- A temporary assignment to another office
Travel to a temporary workplace can qualify for tax relief.
However, a workplace is not automatically temporary simply because attendance lasts less than 24 months. The attendance must also be for a temporary purpose.
⏳ The 24-Month Rule
A workplace will usually stop being temporary if an employee is expected to attend it for more than 24 months.
The key consideration is what is expected at the time, rather than how long the employee ultimately attends.
💡 Example
An employee is assigned to another office for an expected period of 18 months.
After 12 months, the assignment is extended by a further 18 months.
Once it becomes clear that attendance is expected to exceed 24 months, the workplace becomes permanent and travel relief will normally cease from that point.
⚠️ Employers should regularly review long-term assignments, particularly where project deadlines or secondments are extended.
The 40% Rule
The 24-month rule only applies where the employee spends a substantial amount of their working time at that workplace.
HMRC generally treats this as 40% or more of working time.
💡 Example
An employee spends one day each week at a temporary project office and the remainder of their time working elsewhere.
As attendance represents less than 40% of their working time, the workplace may continue to qualify as temporary.
🏠 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 Home Working
If an employee chooses to work from home for convenience, their home is not usually considered a workplace for travel purposes.
As a result:
- Travel from home to the office is ordinary commuting.
- Any employer reimbursement of these costs is generally taxable.
This applies even if the employee works from home regularly, unless home working is required by the employer.
2. Employer-Mandated Home Working
Where an employer requires home working as part of the employee's role, the position may be different.
The home may be treated as a workplace and certain journeys from home to other work locations may qualify for tax relief.
HMRC will consider factors such as:
- Employment contract terms
- Hybrid working policies
- Business requirements
- Whether suitable office accommodation is available
💡 Tip: The distinction is based on business necessity rather than employee preference. HMRC will expect evidence that home working is genuinely required by the employer.
🚗 Travel Between Workplaces
Travel between workplaces for business purposes is generally treated as business travel.
Examples include:
✅ Office to a client meeting
✅ Office to another company location
✅ Temporary workplace to another business location
However:
❌ Home to a permanent workplace is usually ordinary commuting
Where travel qualifies as business travel, associated costs such as parking, accommodation and subsistence may also qualify for relief.
📄 Documenting Workplace Arrangements
To support any travel expense claims or tax relief:
- Clearly document hybrid working arrangements in employment contracts or company policies.
- Record whether home working is optional or required.
- Retain records of travel claims and expense reports.
- Monitor temporary assignments approaching the 24-month threshold.
- Keep records of assignment extensions and attendance patterns.
Good documentation provides evidence of workplace status, which HMRC may rely on when reviewing expense claims.
💡 Updating employment contracts and hybrid working policies can help support the correct tax treatment of travel expenses.
Troubleshooting 🔍
❓Our employees only attend the office occasionally. Can they claim travel costs?
Usually not. The office may still be a permanent workplace even if attendance is infrequent.
❓We have a hybrid working policy. Does this mean travel to the office qualifies for relief?
Not necessarily. HMRC will consider whether the office remains a permanent workplace and whether home working is required by the business.
❓A temporary assignment has been extended. What should we do?
Review the expected duration of the assignment. If attendance is now expected to exceed 24 months and the 40% test is met, travel relief may no longer be available.