Unfair contact of employment term? Mileage to temporary workplace

anneleyskiing

I put this post below on the 'Cutting Tax' forum and got a couple of helpful replies but it was recommended I poste elsewhere the the employment law query.

I am an employee and my employer recently revised its travel and subsistence scheme. This has introduced the idea of ‘notional Home to Work deduction.’ which the scheme it replaced did not have. Here is an extract:-

“If it is practical to do so (such as at the beginning of the working day), individuals should begin journeys from their home rather than their base. This would only be possible if the journey length is shorter by setting off from the individual’s home rather than their base.

Individuals should deduct the notional home to base miles that would have been incurred, had the individual travelled to their base, from the mileage being claimed for the journey.

Wherever possible, the car’s mileometer readings should be used to determine actual mileage, rather than estimated calculations.

Example: Return home to base mileage is 50 miles. Business mileage travelled is 80 miles. The travel claim is for the net difference of 30 miles”

I live 59 miles from my permanent workplace and commute by driving 10 miles to the railway station and then getting the train (£13.80 fare).

I am required under my contract of employment to work at a temporary workplace which is 77 miles from my home. The distance between my permanent workplace and the temporary one is 32 miles. My permanent workplace is not ‘on the way’ to the temporary one. My home and the two workplaces are on 3 points of a triangle. I can get to the temporary workplace by train but only if I am not required to be there before 10am due to the train timetables.

Having checked the HMRC website I am confident that my journey to the temporary workplace is business mileage (http://www.hmrc.gov.uk/incometax/relief-mileage.htm) That site also says that :-

“Only two types of journey count as business travel:
• journeys that form part of an employee's employment duties (such as journeys between clients' premises by a salesperson)
• journeys that relate to an employee's attendance at a temporary workplace

Also the scheme does not seem to have envisaged my scenario, where my journey is longer by setting off from my home rather than my base.

Under the new scheme my employer has indicated it will only pay me the difference between my ‘notional mileage to work’ and the travel to the temporary workplace ie,

77 miles – 59 miles = 18 miles x 2 (return) = 36 miles x mileage rate of 45p per mile = £16.20.

As an aside, my commute to my permanent workplace costs me (if calculated at 45p per mile) 10 miles x 2 (return) x 45p = £9 plus £13.80 rail fare = £22.80

If my employer paid the business mileage in full I would receive:
77 miles x 2 (return) x 45p = £69.30

I have pointed out to them that this is not in line with HMRC examples (see http://www.hmrc.gov.uk/manuals/eimanual/EIM32011.htm ).(eg 4 and 6).

http://www.hmrc.gov.uk/manuals/eimanual/EIM32300.htm says that :
‘A journey to a temporary workplace that takes the employee in a completely different direction to his or her ordinary commuting journey is not substantially ordinary commuting even if the distance is the same.’

It seems that I’m able to claim tax relief but will have to do a Self Assessment tax return and fill in a form (P87 I think). See Direct Gov link http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/IncomeTax/Taxallowancesandreliefs/DG_078326

I don’t really understand this process though. Will it mean that the HMRC will give me a tax rebate of £53.10 for each journey I do (ie £69.30 I can claim less £16.30 received)?

I feel that I have a grievance with my employer but want to be sure of my facts before I go back to them or approach the HMRC for advice.

I do this journey between 2 – 6 times per month, so over a year the sums would not be insignificant, to me at least, though no where near the 10,000 miles per year HMRC cut off point for the standard relief.


Questions:
Is it an unfair contract term?
The term came into force on 1st October 2011 so I believe I have until 31 December to make a claim for 'unfair dismissal.' Should I do that in any event in order to reserve my position while I try to sort it out informally or through a grievance proceedure?

Thanks in advance

LittleVoice

anneleyskiing wrote: »

I put this post below on the 'Cutting Tax' forum and got a couple of helpful replies but it was recommended I poste elsewhere the the employment law query.

I am an employee and my employer recently revised its travel and subsistence scheme. This has introduced the idea of ‘notional Home to Work deduction.’ which the scheme it replaced did not have. Here is an extract:-

“If it is practical to do so (such as at the beginning of the working day), individuals should begin journeys from their home rather than their base. This would only be possible if the journey length is shorter by setting off from the individual’s home rather than their base.

Individuals should deduct the notional home to base miles that would have been incurred, had the individual travelled to their base, from the mileage being claimed for the journey.

Wherever possible, the car’s mileometer readings should be used to determine actual mileage, rather than estimated calculations.

Example: Return home to base mileage is 50 miles. Business mileage travelled is 80 miles. The travel claim is for the net difference of 30 miles”

I live 59 miles from my permanent workplace and commute by driving 10 miles to the railway station and then getting the train (£13.80 fare).

I am required under my contract of employment to work at a temporary workplace which is 77 miles from my home. The distance between my permanent workplace and the temporary one is 32 miles. My permanent workplace is not ‘on the way’ to the temporary one. My home and the two workplaces are on 3 points of a triangle. I can get to the temporary workplace by train but only if I am not required to be there before 10am due to the train timetables.

Having checked the HMRC website I am confident that my journey to the temporary workplace is business mileage (http://www.hmrc.gov.uk/incometax/relief-mileage.htm) That site also says that :-

“Only two types of journey count as business travel:
• journeys that form part of an employee's employment duties (such as journeys between clients' premises by a salesperson)
• journeys that relate to an employee's attendance at a temporary workplace

Also the scheme does not seem to have envisaged my scenario, where my journey is longer by setting off from my home rather than my base.

Under the new scheme my employer has indicated it will only pay me the difference between my ‘notional mileage to work’ and the travel to the temporary workplace ie,

77 miles – 59 miles = 18 miles x 2 (return) = 36 miles x mileage rate of 45p per mile = £16.20.

As an aside, my commute to my permanent workplace costs me (if calculated at 45p per mile) 10 miles x 2 (return) x 45p = £9 plus £13.80 rail fare = £22.80

If my employer paid the business mileage in full I would receive:
77 miles x 2 (return) x 45p = £69.30

I have pointed out to them that this is not in line with HMRC examples (see http://www.hmrc.gov.uk/manuals/eimanual/EIM32011.htm ).(eg 4 and 6).

http://www.hmrc.gov.uk/manuals/eimanual/EIM32300.htm says that :
‘A journey to a temporary workplace that takes the employee in a completely different direction to his or her ordinary commuting journey is not substantially ordinary commuting even if the distance is the same.’

It seems that I’m able to claim tax relief but will have to do a Self Assessment tax return and fill in a form (P87 I think). See Direct Gov link http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/IncomeTax/Taxallowancesandreliefs/DG_078326

I don’t really understand this process though. Will it mean that the HMRC will give me a tax rebate of £53.10 for each journey I do (ie £69.30 I can claim less £16.30 received)?

I feel that I have a grievance with my employer but want to be sure of my facts before I go back to them or approach the HMRC for advice.

I do this journey between 2 – 6 times per month, so over a year the sums would not be insignificant, to me at least, though no where near the 10,000 miles per year HMRC cut off point for the standard relief.


Questions:
Is it an unfair contract term?
The term came into force on 1st October 2011 so I believe I have until 31 December to make a claim for 'unfair dismissal.' Should I do that in any event in order to reserve my position while I try to sort it out informally or through a grievance proceedure?

Thanks in advance

You have not been dismissed, so there cannot be a claim for unfair dismissal. You are perhaps thinking of constructive dismissal. Such claims are notoriously difficult to prove and yours seems without much merit in that respect.

Claiming in respect of underpaid business travel costs from HMRC does not mean that you receive the actual difference - otherwise no employer need pay as the employee would always be able to get the value through a tax rebate. What you can claim is the tax paid on the amount.

anneleyskiing

Thanks for the post above. Why would a claim be without merit though? I am effectively subsidising my employer for carrying out a duty under my contract of employment.

If I were able to claim up to 32 miles each way (base - temporary workplace - base) I would be able to claim 64 x 45p = £28.80.

There are some great anomalies here. A colleague who lives very near to the base can claim 32 miles each way, but I, who commutes from a long way can only claim 20 miles each way.

If I travelled from my home to the temporary workplace and back to base (I do this quite often), a distance of 77 + 32 + 59 = 168 miles, what can I claim then?

Also, if my employer wanted me to travel to a different temporary workplace which was less than 59 miles to work (distace to base), under this scheme I would be entitled to claim nothing. How can that be fair when I have to tax, insure and put petrol in the car?

There is also the point that I only commute 10 miles by car each way when getting to base. Does that mean I have a fair argument (as a poster on the Cutting tax guide suggested) in claiming 67 miles each way (ie 77 miles less 10 'notional' miles)?

LittleVoice

anneleyskiing wrote: »

Thanks for the post above. Why would a claim be without merit though? I was, of course, writing about a claim of constructive dismissal, not a claim for full travel costs. I am effectively subsidising my employer for carrying out a duty under my contract of employment.

If I were able to claim up to 32 miles each way (base - temporary workplace - base) I would be able to claim 64 x 45p = £28.80.

There are some great anomalies here. A colleague who lives very near to the base can claim 32 miles each way, but I, who commutes from a long way can only claim 20 miles each way.

If I travelled from my home to the temporary workplace and back to base (I do this quite often), a distance of 77 + 32 + 59 = 168 miles, what can I claim then?

Also, if my employer wanted me to travel to a different temporary workplace which was less than 59 miles to work (distace to base), under this scheme I would be entitled to claim nothing. How can that be fair when I have to tax, insure and put petrol in the car?

There is also the point that I only commute 10 miles by car each way when getting to base. Does that mean I have a fair argument (as a poster on the Cutting tax guide suggested) in claiming 67 miles each way (ie 77 miles less 10 'notional' miles)?

................

cr1mson

I would have thought this was a pretty standard contract term I know when I have had to travel for my work I always had to deduct my notional mileage from any claim when I went to another office/visit a client. You are saying that you have to put petrol in tax and insure it etc and in effect you are subsidising your employer. However your employer is subsidising you if they pay for full mileage to a temporary place of work as you would have normally have had to pay to commute to your usual place of work. By going to temporary place of work you will saved that cost so by your employer only paying you for the difference seems reasonable to me.

C

Hammyman

anneleyskiing wrote: »

Questions:
Is it an unfair contract term?
The term came into force on 1st October 2011 so I believe I have until 31 December to make a claim for 'unfair dismissal.' Should I do that in any event in order to reserve my position while I try to sort it out informally or through a grievance proceedure?

Thanks in advance

No it isn't. There actually isn't any legal requirement for your employer to reimburse you at all. You'd have to pay the first part to go to your permanent place anyway and any difference between the HMRC rates and what your employer pays can be claimed via a P87 so I fail to see the issue.

By all means leave your job but you're cutting off your nose to spite your face.

getmore4less

Does your contract require you to provide a car for business use?

LittleVoice

Hammyman wrote: »

No it isn't. There actually isn't any legal requirement for your employer to reimburse you at all. You'd have to pay the first part to go to your permanent place anyway and any difference between the HMRC rates and what your employer pays can be claimed via a P87 so I fail to see the issue.

By all means leave your job but you're cutting off your nose to spite your face.

post #2

Claiming in respect of underpaid business travel costs from HMRC does not mean that you receive the actual difference - otherwise no employer need pay as the employee would always be able to get the value through a tax rebate. What you can claim is the tax paid on the amount.

....................

anneleyskiing

getmore4less wrote: »

Does your contract require you to provide a car for business use?

I will check. I am classed as a casual car user if that makes any difference.

A factor here is that I believe that employees were not properly consulted about this change to our terms and conditions. I've been told that if I don't do anything about it within three months of the new conditions coming into force it will be too late and I will have deemed to have accepted them.

anneleyskiing

LittleVoice wrote: »

post #2 ....................

The HMRC own examples
EIM32011 - Travel expenses: travel for necessary attendance: introduction: simple examples

Example 4
An employee lives in Oxford and travels to work in London at a daily cost of £30. One day she has to travel to a temporary workplace in Hereford, travelling directly from home at a cost of£34. She can deduct the full cost of £34.


Example 6
An employee is a purchaser for a retail company. She has a permanent workplace in Doncaster but spends several days each month visiting suppliers all over the country, often travelling directly from home. She can deduct the full cost of her travel to suppliers but not the cost of travel to Doncaster, because that is ordinary commuting.

On the Cutting Tax forum I was advised as follows:-

"Turning now to any shortfall in reimbursement, you get tax relief on it not the actual amount rebated. So in your example you would get tax relief on £53.10 which, depending on your marginal rate of tax, will be 20% or 40% of £53.10."

So I calculate I could claim £53.10 x 20% = £10.62.

Or is this incorrect? I thought this was right when I reread the guidance on the Direct Gov website.

The fact is that when I commute to base I drive just 10 miles each way and get on the train for the rest. These journeys are not comparable and the HMRC supports me on that (see other links in my first post for other examples).

BoGoF

Not sure what your question is?

You get tax relief on your un-reimbursed expenses, that is all.