Mileage payments are being treated as taxable income by employer.

Up_against_it

Hi

I have two employers, one of which I do ad-hoc jobs for as and when needed. I travel to do these jobs and I get paid 45p per mile for using my own private car (insured for business use). Each month the employer pays my mileage fees and then reports them to HMRC as taxable income. I believe these payments shouldn't be taxable because they are repayment for expense incurred and are not above HMRC's approved amount.

The employer is insistent that the amounts are taxable because they class it as travel from home to work.

I don't have a fixed place of work. The employer manages 200 buildings across the UK and I can travel to any of them within my region when I'm told to go. My employment contract clearly states that my place of employment is "North and Central Region". Considering I can often travel 200 miles in a day, I wouldn't class that as an average commute!

Any opinions, expert or otherwise, would be welcomed.

Jeremy535897

It's complex. See:
https://www.litrg.org.uk/tax-guides/employment/employment-benefits-and-expenses/what-travel-expenses-can-i-claim

HampshireH

Up_against_it said:

Hi

I have two employers, one of which I do ad-hoc jobs for as and when needed. I travel to do these jobs and I get paid 45p per mile for using my own private car (insured for business use). Each month the employer pays my mileage fees and then reports them to HMRC as taxable income. I believe these payments shouldn't be taxable because they are repayment for expense incurred and are not above HMRC's approved amount.

The employer is insistent that the amounts are taxable because they class it as travel from home to work.

I don't have a fixed place of work. The employer manages 200 buildings across the UK and I can travel to any of them within my region when I'm told to go. My employment contract clearly states that my place of employment is "North and Central Region". Considering I can often travel 200 miles in a day, I wouldn't class that as an average commute!

Any opinions, expert or otherwise, would be welcomed.

For a set up like this they should state a set number of miles as being the non paid commute and pay whatever is accrued after that.

For example a blanket policy on all employees driving under this type of contract that they don't pay the first 5, 10 or 15 miles of the day.

Office based staff this wouldn't apply to if they aren't flexible workers in so much as they are office based and you are not.

Would certainly improve consistency

Andy_L

Up_against_it said:

Hi

I have two employers, one of which I do ad-hoc jobs for as and when needed. I travel to do these jobs and I get paid 45p per mile for using my own private car (insured for business use). Each month the employer pays my mileage fees and then reports them to HMRC as taxable income. I believe these payments shouldn't be taxable because they are repayment for expense incurred and are not above HMRC's approved amount.

The employer is insistent that the amounts are taxable because they class it as travel from home to work.

I don't have a fixed place of work. The employer manages 200 buildings across the UK and I can travel to any of them within my region when I'm told to go. My employment contract clearly states that my place of employment is "North and Central Region". Considering I can often travel 200 miles in a day, I wouldn't class that as an average commute!

Any opinions, expert or otherwise, would be welcomed.

Because your place of work is defined as a region, HMRCs view is that the whole region is your permanent place of work & thus not eligible for tax relief.

https://www.gov.uk/guidance/ordinary-commuting-and-private-travel-490-chapter-3#duties-defined-by-reference-to-a-particular-geographical-area

Up_against_it

Thanks for the link Andy L.

3.34

An employee whose duties are defined by reference to a particular geographical area is entitled to tax relief for the full cost of business travel:

• made within the geographical area
• to other workplaces outside the area

Example

Hope lives in Perth and is employed by a Scottish utility company. She has no office and her duties are defined by reference to the whole of the geographical area of Scotland which is her permanent workplace.

Sometimes Hope has to travel long distances within Scotland and occasionally she goes to London on business. This often involves meals while travelling and staying in hotels.

Hope is entitled to tax relief for these travel costs in full.

So that appears to suggest that my mileage should NOT be treated as taxable income.

Jeremy535897

"These" travel costs in the Hope example mean travel that is either:

• a journey from one site to another within the geographical area
• a journey from home to somewhere outside the area

It is slightly more complex if you live outside the area concerned. I assume you do not? What isn't covered in Hope's case is travel from home to her first workplace within the geographical area, or the travel from the last workplace back to home. So Hope can claim nothing if she goes to one workplace in the day. If she travels from home to workplace A, then from workplace A to workplace B, then from workplace B to home, only the journey from workplace A to workplace B is allowable.

Your employee does not carry out this analysis, treating all journeys as private. If you do make journeys that are tax deductible, you need to claim the deduction yourself, and keep detailed mileage records.

Andy_L

That's tax relief for "business travel "

If you look at some of the other examples people aren't getting it 
"Henry lives in Norwich and is a relief manager for a chain of East Anglian regional tourist board offices. He shares responsibility for providing cover for all the offices, attending an office for a full day on each occasion.

There is no regular pattern to his work. His duties are defined by reference to a particular geographical area.

As the area is his permanent workplace Henry is not entitled to tax relief for his non-business travel costs."

For some reason your employer thinks your home-work journey is "non-business travel costs" (ie its commuting) and thus taxable. I think that's because travel from home to "permanent workplace" is not claimable & they think each individual site within the area is an individual permanent workplace rather than the area itself as the permanent workplace.

TBH I've now confused myself & changed my position and I think they are wrong because you aren't commuting, because you are already at your permanent workplace when you walk out your door. (see the example where someone who lives outside the area can't claim for the mileage up to the area but can claim once they are within it)

As Jeremy535897 said, "its complex"

Jeremy535897

Andy_L said:

That's tax relief for "business travel "

If you look at some of the other examples people aren't getting it 
"Henry lives in Norwich and is a relief manager for a chain of East Anglian regional tourist board offices. He shares responsibility for providing cover for all the offices, attending an office for a full day on each occasion.

There is no regular pattern to his work. His duties are defined by reference to a particular geographical area.

As the area is his permanent workplace Henry is not entitled to tax relief for his non-business travel costs."

For some reason your employer thinks your home-work journey is "non-business travel costs" (ie its commuting) and thus taxable. I think that's because travel from home to "permanent workplace" is not claimable & they think each individual site within the area is an individual permanent workplace rather than the area itself as the permanent workplace.

TBH I've now confused myself & changed my position and I think they are wrong because you aren't commuting, because you are already at your permanent workplace when you walk out your door. (see the example where someone who lives outside the area can't claim for the mileage up to the area but can claim once they are within it)

As Jeremy535897 said, "its complex"

That would only apply if OP's home was also a workplace, which seems unlikely as it will not be a building under the employer's management. Doing a bit of administration at home won't make the home a workplace.

Up_against_it

Jeremy535897 said:

Andy_L said:

That's tax relief for "business travel "

If you look at some of the other examples people aren't getting it 
"Henry lives in Norwich and is a relief manager for a chain of East Anglian regional tourist board offices. He shares responsibility for providing cover for all the offices, attending an office for a full day on each occasion.

There is no regular pattern to his work. His duties are defined by reference to a particular geographical area.

As the area is his permanent workplace Henry is not entitled to tax relief for his non-business travel costs."

For some reason your employer thinks your home-work journey is "non-business travel costs" (ie its commuting) and thus taxable. I think that's because travel from home to "permanent workplace" is not claimable & they think each individual site within the area is an individual permanent workplace rather than the area itself as the permanent workplace.

TBH I've now confused myself & changed my position and I think they are wrong because you aren't commuting, because you are already at your permanent workplace when you walk out your door. (see the example where someone who lives outside the area can't claim for the mileage up to the area but can claim once they are within it)

As Jeremy535897 said, "its complex"

That would only apply if OP's home was also a workplace, which seems unlikely as it will not be a building under the employer's management. Doing a bit of administration at home won't make the home a workplace.

Thanks both for your input. I tend to be in agreement with Andy L here. If I lived 1 mile outside my geographical area, I couldn't claim relief for that 1 mile of travel but I could claim for all the mileage within the area once I'd reached its boundary. Since I'm already in the geographical area it seems logical to treat all the mileage as business miles rather than a commute because I can't undertake the tasks needed at each property without travelling to them.

To confuse matters further, my wife works for the same company on a full-time basis. She works from our home to manage the same geographical area that I occasionally work within. Her considerable business mileage along with other expenses are paid separately to payroll and are entirely tax free. When I question HR as to the discrepancy between us, I just get told that "your wife is treated differently" with no explanation as to why.

I'm in a slightly different position to most of the property staff who are all attached to an individual property. They don't get paid any travel to and from their property because that is their permanent workplace. They do get paid mileage, tax free, for any other property they are required to attend. I'm not attached to any property, just a region. I take my instructions from home and attend to tasks as and when they are needed. I may not visit any properties for weeks on end and then I may get instructions to visit 3 in a week. I cannot see for the life of me why the mileage is being treated as a commute rather than genuine business miles necessary for the performance of my duties.

Indeed, there is almost a tacit admission from the company that the miles travelled are entirely for business purposes. For every forty miles I travel, I'm paid for 1 hour of work (taxed, of course) in addition to the mileage allowance. I'm sure they wouldn't be paying me if they believed it was commuting.

Jeremy535897

I agree that it is a difficult question. You certainly have a good argument, so why don't you claim for the mileage and see what happens?