Employee travel and subsistence and the P11d

by Michael Blaken

Published on 23rd June 2022

Employees’ and directors’ P11ds for 2021/22 are due by 6 July 2022, which detail employees’ expenses and benefits. So now is a good time to remember the rules around travel and subsistence, particularly as HMRC has issued updated guidance and useful examples of its interpretation of the law.

Tax relief for employee travel costs is available provided the journey isn’t ordinary commuting or private travel. As such, amounts paid by the employer would not be taxable.

No relief is available for ordinary commuting, which is travel between home (or a place that is not a workplace) and a ‘permanent workplace’.

There are a number of criteria for determining if a workplace is temporary or permanent, but in general a workplace will always be a permanent workplace if the worker:

  • regularly goes to the same workplace in the course of a period of continuous work which lasts or is likely to last more than 24 months, or
  • regularly goes to the same workplace for all or almost all of the time for which the worker is likely to hold (or continues to hold) the same employment.

Where the journey qualifies for tax relief, then necessary and reasonable subsistence costs associated with that journey would also qualify for tax relief, and if paid or reimbursed by the employer would not be taxable employment income.

Where expenses (such as travel and subsistence) are incurred wholly, exclusively and necessarily in the performance of the duties of the employment they no longer need to be reported on form P11d. A dispensation from reporting is no longer required but HMRC would expect there to be controls in place within the organisation to review and approve the expenditure.

To chat to Swindon accountants and Cheltenham accountants about tax rules governing travel and subsistence, please get in touch with Optimum.

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