Hybrid working – what is ‘a business journey’?

HMRC have updated their guidance on what qualifies as ordinary commuting and private travel for tax purposes to include hybrid or flexible working.

Generally, where an employee has to work at home as a requirement of the job, then HMRC will accept that the employee is entitled to tax relief for the expenses of travelling from their home to another workplace, such as the office, when this is in performance of the duties of their job.

Usually, HMRC will only accept that working at home is a requirement of the job if facilities that an employee needs to do their job are only available at their home.

On the other hand, if an employer provides suitable facilities elsewhere that could be used by the employee, or the employee chooses to work from home, then HMRC won’t accept that working from home is a requirement of the job.

HMRC provide an example to illustrate this: The work of an area sales manager living in Glasgow requires her to manage the company’s regional sales team across Scotland, but the company’s nearest office is in Newcastle. Since the manager can’t practically attend that office and is required by her employer to keep all client information securely at home, she’s entitled to tax relief for her costs on the occasions she travels to the company’s office in Newcastle.

Since the Pandemic and with improvements in technology, many employers now allow their employees the choice of working from home on a flexible or hybrid basis. The employee will usually have a base office that they attend on the days they’re working in the office.

Since this flexible way of working is voluntary for the employee, they aren’t required to work from home. This means that any journeys they make from home to the office are ordinary commuting and don’t qualify for tax relief.

This is important if you’re an employer and you reimburse staff using the approved mileage rates. You must make sure that you don’t reimburse expense claims for home to office travel for employees who are hybrid workers through choice. If you do, the payment then becomes a benefit and will need to have tax and national insurance deducted via payroll.

If you’re unsure about whether you or an employee qualifies for tax relief on home to office journeys, please get in touch; we’re happy to help!