CIPP poll on taxation of employee expenses
16 January 2018
If your employee has a meeting away from their normal workplace and they pass their workplace en route to the meeting, do they claim the mileage from home to the meeting or just from their workplace to the meeting?
This question has been raised from one of our members due to the call for evidence (March to July 2017) on the taxation of employee expenses, in particular the process for claiming tax relief on non-reimbursed employment expenses.
HMRC’s policy used to be that if the employee passed their normal workplace to go to a meeting then they could only claim the business mileage from the workplace and not from home.
HMRC rules then changed so that as long as the employee didn’t go into the workplace and do work (they can pick up work papers etc.) en route to the meeting, then the whole journey is viewed as business mileage (see guidance 490 Employee travel s3.48-9).
According to the call for evidence the tax relief on expenses which employers do not reimburse and employees then claim from HMRC, costs the Exchequer £800 million per year, and there has been a 25% increase in claims between 2009-10 and 2014-15. When employers reimburse expenses, this does not need to be reported to HMRC (in effect, the expense is just ignored for tax purposes) so the government has limited data on how much the tax relief for reimbursed expenses is worth.
Given the significance of expenses to employers, employees and the tax system, the government wants to ensure that the rules are effective, and to understand more about why the claims for non-reimbursed expenses have increased.
The government published their response to the call for evidence and respondents did not agree on a definitive cause for the recent increase in Exchequer cost for non-reimbursed expenses and the number of employees claiming this tax relief. However, they did indicate a few reasons that could have contributed. Some thought increased cost pressures for some organisations means that they are reimbursing their employees’ business expenses less generously than before, leading to more employees with non-reimbursed expenses and therefore more employees eligible to claim tax relief from HMRC. Others suggested that employees’ knowledge of how to claim, although still generally limited, may be improving due to guidance and advertising by third parties.
The government announced at autumn budget 2017 that it will:
-
Work with external stakeholders to explore possible improvements to the guidance on employee expenses, particularly on travel and subsistence, and the process for claiming tax relief on non-reimbursed expenses
So work is ongoing to improve guidance and processes, but going back to the original question at the beginning of this article, we would be interested to know what mileage you or your employees claim for when attending business meetings.
Please take a moment to complete our one tick box poll which is situated to the right of this news item on our website.