commuting costs and tax

headingsouth_2

I know that commuting costs are not tax deductible expenses but I have just been offered a job which will require me to work in a number of locations including a head office of the company in London.

I think that I will work around 2-3 days in London, 1 day from home and 1-2 days in a number of branch offices close to my home in Kent. The cost of an annual season ticket from my home to London is £3k and the benefit is marginal given that I will only be travelling there 2 or 3 times each week.

In my contract negotiations with my new employer, is it legal for me to ask them to reduce my salary by £3k and then designate my home as my base place of work. I can then claim expenses for travel from home to my local branch offices and to and from head office in London.

Both my employer and I would win in this scenario given that they will pay reduced NI costs and I would save around £1.5k in tax and NI each year.

Is this arrangement legal?

paulus

Giving up taxable pay and replacing it with something tax efficient is certainly legal. What you need to make sure is that the travel would be allowable tax free and this may not be the case.

The base shown in the contract is only one consideration. What is most important is what happens in practice. If you are travelling to a temporary workplace the costs will be allowable. There may be an argument that travel to branch offices meets this requirement. What is likely to me more difficult is the travel to head office. If you are travelling there each time to undertake self contained pieces of work you could be OK. With the regularity that you mention I suspect that you are travelling there to fulfill an ongoing role in which case the travel would be ordinary commuting and taxable. HMRC has produced a booklet http://www.hmrc.gov.uk/helpsheets/490.pdf with a number of examples so it may be worth checking which are most relevant to your circumstances.