Tax relief and travel expenses

  • Business Advice
An employer sorting out travel expenses for his employees.
Kate Palmer FCIPD - Director of HR Advice and Consultancy at global employment law consultancy, Peninsula.

Kate Palmer, HR Advice and Consultancy Director

(Last updated )

ITEPA 2003 provides tax relief in respect of travel which is necessary in order for work to take place and which is not ‘ordinary commuting’

Ordinary commuting means travel between a permanent workplace and home or anywhere else that is not a workplace, so travel to and from a temporary workplace should normally be eligible for relief – but deciding what is a permanent workplace can be far from straightforward and it should always be borne in mind that a person may have more than one permanent workplace.

Geographical areas

Some employees do not have any one single place of work, but instead their duties involve making visits to places throughout a particular area. In these cases, ITEPA 2003, s339(8) may treat the whole of that geographical area as if it was a single workplace. The conditions for this treatment to apply are that:

(1) the duties of the employment are defined by reference to an area (whether or not the employee is also required to visit areas outside of that area);

(2) the employee visits different places within that area;

(3) none of those places is a permanent workplace;

(4) the area (if thought of as a single place) would meet the general conditions for being a permanent workplace – for example, that the employee has ongoing duties in the area which are expected to last for more than 24 months.

If the conditions are met, all travel within the particular area will be eligible for relief, but travel to and from that area will be ordinary commuting and thus ineligible.


To illustrate how this works in practice, suppose a national company with its head office in York has a number of sales staff each with a travelling role in which they are responsible for all sales activity in a set area.

They are required to work at the company’s head office every Friday to attend a regular sales meeting, process orders, deal with queries and plan their customer visits for the following week. The rest of the working week is spent visiting various potential and existing customers throughout their given area.

John lives in York and is allocated the whole of Yorkshire as his sales area. Nadiya also lives in York, but is allocated Lancashire as her sales area.

The York head office will be a permanent workplace for both of them. They attend the head office regularly and although they spend less than 40% of their time there, it is for a period which is not of limited duration (ie, is expected to last for more than 24 months) and involves ongoing duties, rather than performing a task of a self-contained nature.

Travel from home to the head office and vice versa will be ordinary commuting and is thus not eligible for relief.

John lives within his sales area and as there is already a permanent workplace within that area (the head office), the conditions of s339(8) are not met. Yorkshire therefore cannot be a permanent workplace for him.

However, this should not adversely affect John, because the locations of his existing and potential customers will all be temporary workplaces and so travel both to and from each of those locations will be eligible for tax relief.

Nadiya lives outside her sales area and there is no other permanent workplace within it, so the conditions of s339(8) are met. Lancashire is therefore treated as a permanent location for her (in addition to the York head office).

This means she will be put at a relative disadvantage to John. Travel from her home in York to the Lancashire border will be ordinary commuting and is not eligible for tax relief. Travel does not begin to be eligible for relief until she crosses the border into Lancashire, at which point she will be travelling within her permanent workplace (rather than to and from it).

The same will be true of her return journey home – travel up to the Lancashire border remains eligible for relief, but on crossing the border back into Yorkshire, she effectively resumes ordinary commuting.


Specific provision is made in the legislation (ITEPA 2003, s339(4)) for a depot or similar place to be treated as a permanent workplace if:

(1) it forms the base from which the duties of the employment are performed; or

(2) the tasks to be carried out in the performance of the duties are routinely allocated there.

An obvious example will be a haulage yard, where lorry drivers pick up their loads and/or are allocated pick-up and drop-off addresses. It does not matter how much time the employee spends at that place if it is where the tasks are routinely allocated. For example, a plumber may attend their employer’s offices each morning for a matter of a few minutes in order to be given a list of that day’s jobs – nevertheless, it will be a permanent workplace. On the other hand, a plumber who normally receives notification of the day’s jobs by phone but who simply attends the employer’s premises irregularly to stock upon materials is unlikely to have a permanent workplace at all.

Journeys which are substantially ordinary commuting

To prevent abuse, the legislation (ITEPA 2003, s338(2)) denies tax relief for any journey which is ‘substantially ordinary commuting’. HMRC says that this is intended to be a common sense rule and is aimed at preventing tax relief where the journey is broadly the same as the employee’s ordinary commuting journey.

Unfortunately, the legislation does not define ‘substantially’ and there is plenty of scope for interpretation, but HMRC has issued guidance to both employers (in publication 490, para 4.11) and their own staff (in EIM32300) which states that they will not normally seek to argue that a journey is ordinary commuting where it involves an additional 10 miles or more in each direction.

This seems reasonable, but it is not an absolute figure – a variance of less than 10 miles may still be sufficient to qualify for relief and in some cases a variance of more than 10 miles may still be challenged. The judgment is subjective and will always be relative to the length and direction of the journey.

The concept of ‘substantially ordinary commuting’ should not be confused with the so-called ‘triangular travel’ rule under which some employers require employees to subtract their normal home to work mileage/costs from expenses claims.

Understandably, some employers are only prepared to reimburse the additional travel costs incurred by employees, but this is not a requirement of the legislation. For tax purposes, a journey either qualifies in full or it does not qualify at all.


Aleesha normally travels seven miles to get to her permanent workplace in the north side of Coventry, but one day she is first asked to visit a client in the south side of the city. On the way she drives close by her permanent workplace, but continues on to the client’s premises, a journey of 15 miles.

Although she has only travelled an additional eight miles and in the same direction as her ordinary commute, it is more than double the usual mileage and is clearly a different journey which is eligible for tax relief.

The following day, Aleesha is asked to visit a client in Nuneaton. The client’s premises are on her normal route to work, but at a distance of only three miles. Although this is less distance than Aleesha would normally travel and is in the same direction as her normal commute, it is nevertheless a completely different journey and remains fully eligible for tax relief.

Later that week, Aleesha makes a one-off visit to a client in Coventry before going to her normal workplace. The client is based just under a mile from her employer. Whilst the client’s office is clearly a temporary workplace, the journey to get there may be substantially the same as her normal home to work travel.

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