Travel Expenses for Flexible Working

Home or hybrid working patterns are on the rise since the Covid lockdowns, but what does this mean for employee travel expenses? How do these work pattern changes affect what an employee can claim and what the employer should reimburse?

This shift has been further supported by The Flexible Working Bill, which became an Act of Parliament in April 2024. Workers in England, Scotland and Wales now have the right to request flexible working arrangements from their employer including flexibility around the working hours, pattern and location. Home and hybrid working could become even more common, but how does this impact on travel expenses?

In principle nothing has changed in terms of when travel expenses can be claimed, but we need to look at how the existing rules apply to new working patterns.

Allowable travel expenses are those that: the employee is obliged to incur and pay as holder of their employment and, are attributable to their necessary attendance at any place in the performance of the duties of their employment. These expenses are allowed as taxable deductions for the business and can be reimbursed to the employee without tax consequences for them.

Expenses incurred on an employee’s ordinary commute are specifically not allowed. This is the journey between the employee’s home (or another location that is not a workplace) and their permanent workplace.

Expenses for work-related travel necessary as part of the job can generally be claimed but not travel to and from the permanent workplace. The situation is straightforward if an employee is based out of an office (or other workplace) for the whole of their work time. But how does this concept apply when there is working from home or hybrid working? Employees may work at the office, at home or at another location such as a rented hot desk space.

Whatever the work pattern, it’s important to establish the employee’s permanent workplace. This will determine what travel costs are allowable. Where the employee then chooses to work is a different issue.

Sometimes a business may require an employee to work at home, for example if the company doesn’t have a physical workplace or there’s no space available in a workplace. Where this is a job requirement, the employee’s home can be treated as the permanent workplace. If they are required to travel elsewhere for their job, they can claim travel expenses between home (their permanent workplace) and that location.

The business may set a hybrid working pattern as part of the job, for example the employee is in the office for certain, specific days each week and at home for the other days. In this case their permanent workplace would depend on the day of the week. On the home-based days they could claim travel expenses to the office if they were required to go there for a meeting. However, on the other office-based days, this journey would be their ordinary commute and travel expenses would not be allowable.

If working from home is the employee’s choice, whether that’s for some or all the time, then their home would not be treated as a permanent workplace. Their employer may support a request to work from home or give them the option of voluntary hybrid working, but in this case the work location is still the employee’s choice. The permanent workplace will remain as the main office or work location. Any travel between home and the permanent workplace would be classed as ordinary commute and would not be allowable. Travel to a temporary workplace would still be allowed.

Although employees now have the right to request flexible working arrangements, this doesn’t mean that the travel expenses will automatically go along with this. Employees can choose to carry out their work at home, or at another location with their employer’s agreement, but this doesn’t necessarily affect their permanent workplace. Only a change to the permanent workplace by the employer can alter which journeys are allowable for expenses.

If you need further guidance or advice on business expenses, our tax team would be happy to help. You can contact them by calling 01246 274121 and selecting option 2 or by emailing taxteam@mitchellsaccountants.co.uk