Commuting Expenses for Hybrid Workers

The rise of hybrid working arrangements (where employees split their time between home and the office) has introduced complexities in determining the tax treatment of travel expenses. HM Revenue & Customs (HMRC) has updated its guidance to clarify these matters, emphasising the importance of understanding the distinctions between permanent and temporary workplaces, as well as the nature of commuting.

Permanent vs. Temporary Workplaces and Ordinary Commuting

Generally, employees cannot claim tax relief for travel between their home and a permanent workplace, as this is considered ordinary commuting. A permanent workplace is a location an employee attends regularly for their job duties. Conversely, a temporary workplace is attended for a task of limited duration or a temporary purpose. Travel to such locations may qualify for tax relief, provided specific conditions are met (see here).

Hybrid Workers and Travel Expenses

For hybrid workers, determining tax relief eligibility for travel expenses hinges on whether homeworking is mandated by the employer or chosen by the employee. If an employee opts to work from home without employer requirement, travel from home to the office is deemed ordinary commuting, making any reimbursed expenses taxable. HMRC's guidance (see here) underscores that if homeworking is a personal choice, the home is not considered a workplace for tax purposes.

Employer-Mandated Homeworking

When an employer requires an employee to work from home, the home may be recognised as a workplace. In such scenarios, travel between the home and other workplaces can qualify for tax relief, provided the travel is necessary for performing job duties. However, this relief applies only on days when the home is considered a workplace.

Documenting Workplace Arrangements

It's crucial for employers and employees to document any changes to working arrangements. Updating employment contracts to reflect hybrid or homeworking agreements can serve as evidence of workplace locations, aiding in tax determinations and ensuring compliance with HMRC guidelines.