Commute expenses

[bmwmike]

Hello

Hoping for some advice regarding HMRC rules here please.

If someone lived in say, South Wales, and was expected to be in the office, in London, 1-2 days a week - if the employer allowed the employee to expense those costs (which will be significant, esp as hotel may be involved) does that create a tax liability? I think it does, as a BIK?

So to mitigate that, I think i'm correct in saying the employee would need their permanent place of work to either be a completely different office, or their home location if they ordinarily work from home?

Thanks
Mike

[Countdown]

bmwmike said:

Hello

Hoping for some advice regarding HMRC rules here please.

If someone lived in say, South Wales, and was expected to be in the office, in London, 1-2 days a week - if the employer allowed the employee to expense those costs (which will be significant, esp as hotel may be involved) does that create a tax liability? I think it does, as a BIK?

So to mitigate that, I think i'm correct in saying the employee would need their permanent place of work to either be a completely different office, or their home location if they ordinarily work from home?

Thanks
Mike

Designation another place as your "normal" office doesn't work. If you're attending a place of work regularly to carry out your normal duties then that is also considered your normal place of work. i.e. It's possible to have more than one "normal office"

[bmwmike]

Countdown said:

bmwmike said:

Hello

Hoping for some advice regarding HMRC rules here please.

If someone lived in say, South Wales, and was expected to be in the office, in London, 1-2 days a week - if the employer allowed the employee to expense those costs (which will be significant, esp as hotel may be involved) does that create a tax liability? I think it does, as a BIK?

So to mitigate that, I think i'm correct in saying the employee would need their permanent place of work to either be a completely different office, or their home location if they ordinarily work from home?

Thanks
Mike

Designation another place as your "normal" office doesn't work. If you're attending a place of work regularly to carry out your normal duties then that is also considered your normal place of work. i.e. It's possible to have more than one "normal office"

Gah, yeah just reading that at link below, and they also say about 40% of time, but it seems like the word "ordinarily" trumps everything else, i.e. if you go there every week, its an ordinary commute even if its just 1 day.

https://www.gov.uk/guidance/ordinary-commuting-and...

Bummer, good opportunity too.

So if the expenses were 10k (say) and the employer paid them, the liability would be the tax - 40/45% depending on the rate - is that right?

Wondering if an LTD would be the way forward here, and if so, if IR35 is then the problem, or is that still only public sector jobs - this is global tech firm.

How do all these news presenters and actor types working for the BBC in London but living in the cotswolds etc do it - they can't all be stumping up their own cash for travel?

Thanks

Edited by bmwmike on Wednesday 9th February 10:33

Edited by bmwmike on Wednesday 9th February 10:34

[onetwothreefour]

Don't let the tax tail wag the opportunity dog. Sure- there'll be a BIK tax charge, but the employer is still (in effect) paying a decent proportion of your expenses. If you were doing it regularly you may be able to negotiate decent hotel rates, etc. What would you think if the same opportunity was on your doorstep, but the salary was reduced by the net cost to you of travelling?

[Countdown]

bmwmike said:

So if the expenses were 10k (say) and the employer paid them, the liability would be the tax - 40/45% depending on the rate - is that right?

Yes. our company has an agreement with HMRC where we gross up certain BIK and pay the tax on them so the Employee doesn't have to.

bmwmike said:

Wondering if an LTD would be the way forward here, and if so, if IR35 is then the problem, or is that still only public sector jobs - this is global tech firm.

AIUI IR35 started applying to the Private Sector in April 2020.

[bmwmike]

onetwothreefour said:

Don't let the tax tail wag the opportunity dog. Sure- there'll be a BIK tax charge, but the employer is still (in effect) paying a decent proportion of your expenses. If you were doing it regularly you may be able to negotiate decent hotel rates, etc. What would you think if the same opportunity was on your doorstep, but the salary was reduced by the net cost to you of travelling?

Good point, if it was on my doorstep i'd do it for less cash.

There are multiple factors here though, and my assessing tax / costs impact is the one aspect of the overall cost of the extra time and effort of a 3hr each way commute, even if its one day per week on average (unlikely to be every week). I am basically negotiating with them at the moment trying to get them to be more flexible - they contacted me out of the blue, but won't budge on full time WFH (i've been wfh for over 10 years).

[bmwmike]

Countdown said:

bmwmike said:

So if the expenses were 10k (say) and the employer paid them, the liability would be the tax - 40/45% depending on the rate - is that right?

Yes. our company has an agreement with HMRC where we gross up certain BIK and pay the tax on them so the Employee doesn't have to.

Interesting - so the employer pays the employee's tax liability on the BIK? Isn't that, in itself, a BIK?

[Zumbruk]

Countdown said:

AIUI IR35 started applying to the Private Sector in April 2020.

Many years before that. It was starting to come in when I packed up contracting about 25 years ago!

[Countdown]

bmwmike said:

Countdown said:

bmwmike said:

So if the expenses were 10k (say) and the employer paid them, the liability would be the tax - 40/45% depending on the rate - is that right?

Yes. our company has an agreement with HMRC where we gross up certain BIK and pay the tax on them so the Employee doesn't have to.

Interesting - so the employer pays the employee's tax liability on the BIK? Isn't that, in itself, a BIK?

Possibly. in some cases the way it works is that the Employees expenses are grossed up and then processed via payroll. the relevant tax/NI is deducted and the employee gets net pay which is equivalent to the expenses they incurred. It doesn't appear as a BIK.

[Zumbruk]

Countdown said:

bmwmike said:

Countdown said:

bmwmike said:

So if the expenses were 10k (say) and the employer paid them, the liability would be the tax - 40/45% depending on the rate - is that right?

Yes. our company has an agreement with HMRC where we gross up certain BIK and pay the tax on them so the Employee doesn't have to.

Interesting - so the employer pays the employee's tax liability on the BIK? Isn't that, in itself, a BIK?

Possibly. in some cases the way it works is that the Employees expenses are grossed up and then processed via payroll. the relevant tax/NI is deducted and the employee gets net pay which is equivalent to the expenses they incurred. It doesn't appear as a BIK.

For 5 years from 2010 to 2015, my employer paid my expenses for my ~weekly trip to the office (Bedford <-> Sheffield) plus the occasional overnight stay, and that's how they did it.