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Business Services  •  Business Tax  •  Personal tax

HMRC updates commuting cost guidance for WFH employees

By RJP LLP on 30 April 2024

HMRC recently updated its guidance on the reimbursement of travel costs to employees and what this means for hybrid workers. These are employees who are entitled to split their working week between working in an office/official work location and working from home. The rules can be confusing for employers and employees alike, so this article clarifies the tax position when commuting costs for hybrid workers are reimbursed.

Ever since the Covid pandemic, working from home has become a norm for large numbers of workers. Clearly not all jobs are suited to this but where it’s possible, having this flexibility is now almost expected as a ‘benefit’, even for a couple of days a week. This hybrid working expectation has been confirmed by recruiters, who have experienced candidates turning down 100% office-based roles in favour of hybrid roles.

Working from home and current employment law

Today, employees have a legal right to request flexible working arrangements to fit around their needs and responsibilities in accordance with the Flexible Working Bill. This gained royal assent in July 2023 and became an Act of Parliament on 8 April 2024.

Now with the Covid pandemic becoming a distant memory, it is commonplace for employers to expect their workers to return to the office at least for some of the time. Accustomed to saving money on travel costs, some employees have been asking their employers to cover these commuting costs. Depending on the individual’s employment contract and their primary designated place of work, this has (potentially significant) financial and taxation implications. Commuting costs could feasibly go beyond the cost of train tickets and petrol to include subsistence and accommodation.

Allowable travel expensing for employees

Based on the latest HMRC guidance and according to the Income Tax (Earnings and Pensions) Act 2003, tax relief is only allowable for travel expenses if they include the following conditions:

  • the employee is obliged to incur and pay them as holder of the employment; and
  • the expenses are attributable to the employee’s necessary attendance at any place in the performance of the duties of the employment.

If an employee needs to visit another office and travel (and possibly stay overnight) there for a meeting, this is an example of a reimbursable expense.

Expensing for commuting costs

The same rules do not apply where the expenses are incurred in ‘ordinary commuting’, defined by HMRC as being between:

  • the employee’s home and a permanent workplace, or
  • a place that is not a workplace and a permanent workplace.

What happens when an employee divides their time between the office and home, maybe coming to the office on certain days every week?

In some cases, a hybrid working arrangement may result in a permanent change to an employee's permanent workplace for tax purposes. More usually however, when an employee is required to go to the office, this remains their permanent workplace. For tax purposes, this means that if the employee then travels into work on a couple of days each week, they are not entitled to expense these costs without creating a tax liability. If an employer decides to introduce a policy of reimbursing travel costs into work in such circumstances, the reimbursed costs are treated as additional taxable income for the employee.

Latest policy guidance regarding expensing when working from home

The latest HMRC guidance makes this position very clear, as the example extracted from its policy document illustrates.

Example 42 — employees who work at home
“Elliot’s employer has decided to offer hybrid working to its employees. This allows employees to mix working at home with working in the Bristol office. This flexible way of working is voluntary for Elliot, so he is not required to work from home as part of his role.’’

“Elliot decides to split his time between working at home and in the Bristol office. Elliot’s office will remain his permanent workplace when he begins to work in a hybrid way. This means Elliot cannot claim tax relief on journeys made from his home to the office because such journeys are ordinary commuting.”

Things can get confusing when the office no longer exists, and an employee is 100% home based. In these instances, home does become the permanent workplace, but it still doesn’t alter the rules concerning commuting cost tax relief for non-work purposes. This situation is also clarified in the latest guidance:

“An employee is not entitled to tax relief for journeys between their home and any other place attended for reasons other than work, even when home is a workplace. Such travel is private travel. Tax relief will of course be allowed for the costs incurred on travelling between the employee’s home and a temporary workplace.”

If you would like to review the latest guidance on hybrid working, visit the website.

For more information on tax efficient employee benefits, please email


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