28.5.2024 | Tax

Hybrid work and tax: What counts as a business journey?

Beatons navigates the complexities of hybrid working arrangements, ensuring compliance and minimising taxable office travel. 


Working from home is now normal practice for many employees, and most companies have their own set of regulations about how this works for them.

HM Revenue and Customs (HMRC) has its own rules in relation to some work from home matters, particularly around travel.

HMRC has clear guidelines regarding what constitutes ordinary commuting and private travel for tax purposes, particularly in light of the rise of hybrid or flexible working arrangements.

In essence, if an employee is required to work from home as an essential aspect of their job, HMRC typically allows tax relief for travel expenses incurred while journeying from home to another designated workplace, like the office, for job-related duties.

This allowance hinges on the premise that homeworking is necessary due to the absence of facilities elsewhere. However, if an employer provides suitable facilities in alternative locations or if the employee opts to work from home, HMRC will not recognise homeworking as an objective job requirement.

Take the case of an area sales manager based in Glasgow managing a regional sales team across Scotland. Despite the company’s nearest office being in Newcastle, the manager cannot practically commute there and is mandated by the employer to maintain client information securely at home. Therefore, mileage is eligible for tax relief when travelling to the company’s Newcastle office.

Following the lasting impact of COVID-19, plus advancements in communication technology, many employers now offer employees the option of flexible or hybrid working arrangements. Typically, employees do have a designated office they can attend on office-working days.

So, if the flexible working setup is voluntary, employees are not obliged to work from home. Consequently, any journeys from home to the office are considered ordinary commuting and do not qualify for tax relief.

Employers should be mindful of this distinction, especially when reimbursing staff using approved mileage rates. Reimbursing expenses for home-to-office travel for employees who choose hybrid working could inadvertently classify the payment as a benefit, necessitating tax and national insurance deductions through payroll.

If there are uncertainties regarding eligibility for tax relief on home-to-office journeys, employers and employees alike are encouraged to seek clarification from HMRC or relevant tax advisors.

If you are unsure about whether you or an employee qualifies for tax relief on home to office journeys, please call Beatons, who will be happy to help.

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