Payroll
goodwill at a time when many employees are finding it difficult to adjust. In the event that employees are required to change their normal place of work because the employer disposes of their workplace premises, various scenarios may arise. Please see the examples and the ensuing issues to be addressed. Examples (A) Some or all employees are designated as home-based – This scenario could arise because the employer no longer has office facilities – or the size of office space available has reduced – due to selling main offices/buildings. Therefore, if it is accepted that the employees are genuinely home-based, then any travelling expenses they incur for home to temporary place of work journeys would be regarded as business travel and be allowable for tax/NICs purposes. Of course, the employer may choose to pay these costs fully, partially or not at all. If the employer retains some office facilities, a genuinely home-based employee may be undertaking an allowable journey by travelling to them from home provided these do not become a permanent workplace. They would become permanent workplaces if the employee visited them on a regular basis or if HMRC did not accept that home was a permanent workplace. It is strongly recommended that if the employer considers the employee may be home- based proper advice be taken to ensure that there are no nasty surprises from a tax/NICs perspective. (B) Some or all employees are required to change their permanent workplace – If, instead of being designated home- based, some employees are required to relocate to other offices owned/rented by the employer, the new locations will become their permanent workplaces. Therefore, travel from home to these new permanent place(s) of work would not be allowable for tax/NICs purposes. An employer may choose to pay any additional costs that the employee has to incur if the home-to-work journey is longer than previously the case, but payments would be subject to tax/NICs via the payroll. In cases where employees work flexibly, i.e. partly at employer-owned premises and partly from home, journeys
from home to the employer-owned workplaces would still be regarded as private journeys and not allowable for tax/ NICs purposes. (C) Some or all employees are only permitted to work in the main building on certain agreed days – If office space is reduced and the employer introduces a policy whereby employees work in the office on agreed days and from home the rest of the time, it is highly likely that the office location would still be regarded as a permanent workplace, with journeys on the days in question still be regarded by HMRC as private and so not allowable for tax/NICs purposes. The office would not qualify as a temporary workplace because it is where the employee is required to undertake the substantive duties of the job on an ongoing basis. This would be the case even if the employee were designated as home-based on the days when not travelling to the office. ...employers should ensure that these matters are addressed through their internal
costs are allowable for tax/NICs purposes where an employee is required to attend a temporary workplace for genuine business purposes. Therefore, care should be taken to ensure that this is only paid without tax/NICs being applied where the place visited properly qualifies as a temporary workplace. As can be seen from above, it will often still be the case that the locations where the work is undertaken will not qualify as temporary workplaces. ● Cycle to work – If an employee’s normal place of work changes to a location that is further away from home and they used a bicycle under the employer’s cycle-to-work scheme, they may cease to be able (or choose not) to use the bicycle for this purpose to the new location. This may mean that the conditions for the tax exemption are no longer met. Under the terms of the relevant exemption the majority of the use must be for travelling between home and work and for business travel, so this is unlikely to apply if the bicycle is no longer used for travelling to work. ● Relocation expenses – If an employee’s normal workplace changes and they move home to be nearer the new workplace, it may be agreed that the employer meets certain relocation expenses. However, note that the tax exemption on qualifying relocation expenses – up to the statutory limit of £8,000 – will only apply where the former main residence is no longer within reasonable travelling distance of the new workplace and that the new main residence is within reasonable travelling distance. There is no definitive measure of what constitutes ‘reasonable’ in such cases and factors such as quality of the public transport and roads in an area would need to be taken into account. A critical assessment would need to be undertaken to determine whether the exemption may apply. Summary The changes we are seeing as a result of the pandemic and where and how employees are working have to be carefully considered from a tax/NICs perspective. These could potentially have significant consequences and employers should ensure that these matters are addressed through their internal policies and procedures to maintain continuing compliance. n
policies and procedures...
(D) Some or all employees are only permitted to work at hub buildings and/or on a ‘hotdesking’ basis on certain days – In this scenario the employer could require the employee to work at hub buildings and/or work on a hotdesking basis by booking in advance on certain agreed days at a number of different venues. As with Example C, such locations would continue to be regarded as permanent workplaces even where the employee was designated as home-based on the days when not travelling to the office. Other issues In addition to issues regarding travel expenses and help for home-based staff, there are other tax-related issues to consider. ● Subsistence – In addition to mileage and travel costs, reasonable subsistence
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| Professional in Payroll, Pensions and Reward |
Issue 65 | November 2020
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