COMPLIANCE
The future for public sector mileage claims
Duncan Groves, director and head of employment taxes for PSTAX , discusses a significant development
I t was back in 1998 when the old ‘triangular travel’ rules were scrapped and the then Inland Revenue introduced the current employee travel tax legislation and the ‘well-thumbed’ Booklet 490 with its A to Z of examples. Despite the government launching, and subsequently abandoning, a consultation document on travel in 2016, the 1998 legislation has ‘bedded in’ well and now seems almost a familiar part of an employer policy and claims process. With a few exceptions, the rules are relatively easy for employees to understand. They are also ‘generous’ compared to previous legislation, in that travel claims can generally be made free of income tax and National Insurance contributions (NICs) to any ‘temporary workplace’ and the employee has no requirement to deduct their usual home to work travel from their claim. Most private sector employers embraced the relative simplicity of the 1998 rules and sought to mirror them within their own internal travel claims policies. In so doing, those employers have opened themselves up to increased travel costs but, simultaneously, saved time and administration in checking claims and in identifying and processing taxable (private) travel. Perhaps understandably, the public sector took a different view of matters.
Anxious to minimise the additional cost burden, public sector employers embraced the 1998 travel rules but with an important tweak. Employees could claim for their journeys to a temporary workplace but had to reduce those claims by the number of miles they would travel on their usual commute, from home to work, or vice versa. Almost every public sector body has applied this tweak and, by and large, employees accept and apply it, seemingly without complaint. Well, until now... A memorandum issued by the National Police Chief’s Council in May this year has arisen from an officer’s legal challenge to the interpretation of the Police Regulations. These regulations permit officers to claim business travel and contain no reference to any deduction of ‘home to work’ mileage. It appears that the case has been taken forward by the staff associations resulting in a change of policy relating to police mileage claims. Consequently, with effect from 1 June 2020, forces must pay the cost of mileage to temporary workplaces, generally without deduction of the commuting mileage. With Forces already looking to apply the same change of policy to support staff in addition to officers, this could be the moment when the whole sector approach to mileage claims is considered. Other public sector staff associations are sure to follow the line taken by police colleagues
and pressure could start to build for similar changes to be made across local government, the National Health Service and the civil service, amongst other bodies. Clearly, the cost implications become highly significant when viewed across the whole sector. But there are other implications, relating to interpretation of HM Revenue & Customs’ (HMRC’s) guidance and compliance. While the 1998 travel rules are simple, certainly by comparison with what came before, there are certain areas of complexity which need to be fully understood by employers before they try to summarise the guidance in Booklet 490 within their travel policy. Key to tax and NICs compliance is understanding that tax relief can never be given for a commuting journey, namely one between home and the normal workplace. Within Chapter 4 of Booklet 490 – headed ‘Safeguards against abuse’ – is paragraph 4.10 which references when an employee’s journey to a temporary workplace is not “significantly different from their ordinary commuting journey”. An example (‘Keith’) follows showing that a journey from Leicester to a temporary workplace which is only 500 yards from the normal workplace in Nottingham is substantially the same as the ordinary commuting journey and thus no tax relief may be given. The following paragraph explains that “this is intended to be a commonsense rule which applies where the journey to or from a temporary workplace is broadly the same as the employee’s ordinary
...public sector employers embraced the 1998 travel rules but with an important tweak...
| Professional in Payroll, Pensions and Reward | July/August 2020 | Issue 62 34
Made with FlippingBook - Online magazine maker