Tax issues with work location
Discussion
I have a bit of a concern about the way that some jobs have been set up in a company my friend runs but just wanted to be sure of my ground before I tackle it with him. So here is the situation……
He has staff at three locations, one in London and the other two north of London between London and Birmingham but in different places. Most of the staff work in one office and go to that office every day just like most people do with work. For most employees there is also the occasional day (say once a month of less) where they will go to one of the other offices for meetings etc. When they do this their mileage or train tickets are paid for as expenses.
He has a small handful of staff probably about 5 that travel much more regularly than that and they are all based in the office in Huntingdon. They travel on average three days a week to London and their train tickets are paid for and other expenses which he then deals with the tax implications of etc.
I am thinking that if you need someone in the London office for an average three days a week then surely that job should be based in London and they should be paying their own travel to work. In the situation above are they not in some way receiving a benefit that should be taxable as a season ticket from Huntingdon to London would be a good 5k a year and they are not paying that because the employer is paying it in reality through daily tickets.
Any tax people / accountants out there know what the situation is?
He has staff at three locations, one in London and the other two north of London between London and Birmingham but in different places. Most of the staff work in one office and go to that office every day just like most people do with work. For most employees there is also the occasional day (say once a month of less) where they will go to one of the other offices for meetings etc. When they do this their mileage or train tickets are paid for as expenses.
He has a small handful of staff probably about 5 that travel much more regularly than that and they are all based in the office in Huntingdon. They travel on average three days a week to London and their train tickets are paid for and other expenses which he then deals with the tax implications of etc.
I am thinking that if you need someone in the London office for an average three days a week then surely that job should be based in London and they should be paying their own travel to work. In the situation above are they not in some way receiving a benefit that should be taxable as a season ticket from Huntingdon to London would be a good 5k a year and they are not paying that because the employer is paying it in reality through daily tickets.
Any tax people / accountants out there know what the situation is?
It depends on how long those individuals are going to be travelling to London for. If no more than 24 months then it can be considered a temporary workplace. If the arrangement is for more than 24 months or has no defined period then it will almost certainly be a permanent workplace.
If it is a permanent workplace then travel from home to London is commuting and the reimbursed costs taxable. Travel between the Huntingdon office and London office is travel in the performance of duties however and is allowable.
http://www.hmrc.gov.uk/helpsheets/490.pdf
This is an incredibly complex and subjective area of UK taxation. I would advise your friend obtains professional advice on the specific circumstances.
Just to add - the employer can of course pay for whatever they want. They just need to ensure they treat the amounts correctly for tax and NIC.
If it is a permanent workplace then travel from home to London is commuting and the reimbursed costs taxable. Travel between the Huntingdon office and London office is travel in the performance of duties however and is allowable.
http://www.hmrc.gov.uk/helpsheets/490.pdf
This is an incredibly complex and subjective area of UK taxation. I would advise your friend obtains professional advice on the specific circumstances.
Just to add - the employer can of course pay for whatever they want. They just need to ensure they treat the amounts correctly for tax and NIC.
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