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HMRC have published draft guidance on the tax and national insurance (NI) position on journeys home from work and are inviting comments over the next five weeks.

Ordinary commuting journeys between a permanent workplace and home are private journeys for tax and NI purposes. This means that where the cost of that journey is met by an employer it is treated as a benefit in kind and a subsequent charge to tax and NICs will arise.

There are circumstances however, when an employee’s journey home from work late at night, paid for by their employer may be exempt from a tax and NICs charge. The draft guidance published by HMRC aims to clarify what those circumstances are and explains how to apply the criteria, which must be applied on each occasion, to decide whether or not the journey is exempt from tax and NICs.

For example, where an employee is provided with a taxi paid for by his employer for a journey from work to home, the benefit will be exempt from charge under ITEPA 2003, s. 248, as long as:

• all the late working conditions are satisfied (see below); and
• the number of occasions in the tax year on which a taxi is provided is no more than 60.

For the exemption to apply, both these conditions must be satisfied on each occasion that an employee is provided with a taxi for a journey from work to home.

It is sometimes suggested that the exemption applies to the first 60 occasions in a year when a taxi is provided, regardless of the circumstances relating to the taxi being provided. This is not correct. ITEPA 2003, s. 248 is not an annual allowance - it provides an exemption from the income tax charge that would otherwise arise on the provision of a taxi home. It applies only when the late working conditions mentioned above are satisfied. The figure of 60 merely puts a ceiling on the number of journeys that qualify even where all the late working conditions are satisfied.

An employee may be provided with a taxi from work to home on average once a month, or once a week, but even though the total number of taxi journeys in the year is fewer than 60, the exemption in section 248 does not apply, unless all the late night working conditions are also met on each occasion as well.

There are three separate late night working conditions, which are as follows:

• the employee is required to work later than usual and until at least 9pm;
• this occurs irregularly; and
• by the time the employee ceases work either public transport has ceased, or it would not be reasonable to expect the employee to use public transport. 

Link

HMRC: Draft guidance on travel from work to home