Blog Post
I'm an employee - is my travel an allowable business expense?
Laura Arbuckle • Jan 24, 2020
In my last blog post I considered how and when sole traders can claim travel expenses as an expense of their business. The rules for employees (including directors working for their own company) operate in much the same way. However, there are also a couple of extra rules that apply only to employees that you need to consider.
Neither sole traders nor employees are able to claim back the cost of travel between home and a permanent workplace. If your company does make payments to you to cover the cost of this sort of travel, it would be treated as additional salary (and is therefore taxable).
Is my travel necessary
An employee can only claim the cost of their travel if it is necessary for the performance of their duties.
Is my travel to a temporary workplace?
If you are travelling to a temporary workplace, you may be able to claim the cost of the travel as an expense from your company.
The definition of a temporary workplace is when an employee travels to a location to perform a task of limited duration or for a temporary reason.
You might think that this would include regular travel to a temporary role. However, if you work as a temporary employee and you travel to a single workplace throughout the time you hold that employment, it would be considered a permanent workplace. This travel would therefore be a commute and therefore the cost cannot be claimed.
How long have I been travelling to this temporary workplace?
If the nature of your employment is such that you are expected to work in different places at different times, then you will be able to claim your travel costs back from your company without these payments being taxed.
However, if you are expecting to work for more than 40% of your time at a workplace on a contract lasting longer than 24 months then the workplace is no longer considered a temporary workplace. As soon as you believe the contract will run beyond this, the travel would immediately fall under the definition of a commute.
It is not a specific location or role that determines the 24 months, instead it is the area to which you travel that is important. If you change your workplace but there is no substantial impact on the journey that you make or the expense of the journey, the change in workplace doesn’t count as a change when considering the 24-month rule.
I regularly work from home so can I claim travel expenses from my home?
Assuming that you don’t fall foul of the 24-month rule, the next thing we need to consider is where your base is. If a location is considered the base of the employee, then it becomes a permanent workplace and the travel expense cannot be claimed. Indicators of a site being an employee’s base are regular attendance there because it’s the main place where the you work, and are allocated or perform tasks.
Even if you work from home, this does not necessarily mean that you can claim travel expenses for every journey. An employee’s base can only be their home where the home has been equipped with facilities to allow the employee to perform their work from home and the employer hasn’t provided any other facilities that the employee could use.
For example, I work from home regularly but my company also has an office, which is my base of operations. Any travel that I do from home to my office would not be claimable despite me regularly working from home.
I regularly travel around a certain area, can I claim all of my travel?
Some employees do not have a single site as a permanent workplace but instead have an employment for which their duties are defined by a particular geographical area. For these employees the whole of that geographical area is treated as their permanent workplace and travel into the area in which they work is considered a commute. Once you reach the area that you operate in, any additional travel would qualify as business travel.
What can be claimed from your company for travel can be a complex area and sometimes it may not be obvious what can and can’t be reclaimed from your company. If you’re not sure, it’s worth speaking to someone who can help you.
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