Tax on work allowances after 2 years - advice please

kittypimms

Hi guys, hope this is the right section... I'm after some advice please.

I get paid, on top of my monthly salary, an allowance of £200/week (grossed up for tax) for working way from home. My "temporary" 6 month detachment will have lasted 2 years come September - and I've been told that after this time my Allowance becomes taxable.

This seems straight forward, but I can't get my head around it - would someone be able to clarify for me please?

Does this mean I get (Salary + £800) - tax on total amount? Any advice appreciated - hope this makes sense!

Thanks,
KP

John_Pierpoint

(grossed up for tax) ? Is this the way that job related expenses are normally reimbursed to you and fellow employees?

Exceeding 24 months turns a temporary work place into a permanent place of work.
The tax rules don't allow the payment/reimbursement of travelling expenses tax free for travel to a permanent place of work.
[Similarly an employee is expected to "relocate", at the employer's expense tax free, within 2 tax years.]

I am not an expert on this area and my last experience of a company financed relocation was several years ago, so the rules may well have changed.

Hopefully one of the accountants posting on here will be able to quote chapter and verse of the regulations.

Methinks two of the parties to your three way arrangement wants to "normalise" a "temporary" situation that has been dragging on for many months and a deadline is approaching?
http://www.hmrc.gov.uk/manuals/eimanual/eim32089.htm

[When on this page flick back and forward between joining pages for examples and rules applied to the taxation of travel to work payments and their taxation - there is a 40:60 rule or a 24 month limit]