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UK Travel Tax Relief Reforms Raise Concerns

by Robert Lee,, London

06 January 2016

The Association of Tax Technicians (ATT) has warned that proposed changes to the UK's rules on the tax treatment of travel expenses could harm those who work from home.

Within the current system, there are two main travel rules. The first gives relief for "travel in the performance of the duties of the employment," namely for travel that is an intrinsic part of the employee's job. It can also include journeys between two workplaces. The second rule gives tax relief for necessary journeys to workplaces that an employee has to attend for work, apart from the cost of "ordinary commuting."

Under the Government's proposals, employees who work in more than one location for more than 30 percent of their working time would have to choose which of these locations or bases is their main working base. They would then be unable to claim tax relief on the travel costs incurred on journeys between their home and the agreed "main base."

The ATT said that the Government's proposals would also deny homeworkers the opportunity to choose their home as their main base if they have a base elsewhere, such as at their employer's head office. This would therefore deny relief on travel between their work place at home and the head office.

ATT President Michael Steed commented: "It is unfair that homeworkers may not be allowed to nominate their home as their main base under the proposals. It could result in tax relief being denied on what is, in effect, legitimate business travel. This would leave either employers or employees out of pocket and could lead to some employees giving up their jobs."

"The Government already supports homeworking by allowing employees who choose to work at home to be given up to GBP4 per week tax free from their employers, to help with the extra costs of working from home. It feels like a backward step to consider denying tax relief on travel costs in this way, given the increased trend in homeworking. We urge the Government to consider carefully the implications of their proposals."

TAGS: tax | business | value added tax (VAT) | tax incentives | employees | United Kingdom | tax credits | tax breaks | tax reform

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