Under the current UK tax legislation, where an employee is attending a temporary workplace for a limited duration, the cost of certain expenses can be reimbursed free of tax/NIC. The expenses include for example, accommodation, subsistence and travel expenses to and from their temporary workplace.
However, there are instances where for example your employer does not reimburse these expenses and therefore this is an additional cost to you as an employee. Depending on your circumstances e.g. your employment contract, working patterns, support provided by employer etc, you could be due back an income tax refund from HMRC. For example, assuming your qualifying temporary expenses were £1,000 a month over 24 months, you could be due back a tax refund of between £4,800 - £10,800 depending on your UK marginal tax rate.
This article provides an overview of some of the key tax rules and the recommended next steps if you think you may be entitled to a refund.
For the temporary workplace rules to apply, an employee must be attending a particular workplace for a limited duration or a temporary purpose.
A “limited duration” is defined as a place where an employee intends to spend 24 months or less. For example, this is particularly common in the hospitality/construction sectors that operate graduate schemes where employees are required to spend up to 2 years working at different locations during their training contract.
Please note, there are instances where a work location would not be considered temporary such as for example under the fixed term appointment rules. The fixed-term appointment rule prevents a workplace being a temporary workplace where an employee attends, or is likely to attend, it in the course of a period of continuous work for all or almost all of the period that they are likely to hold the employment.
It is therefore important to ensure you review the UK tax rules in line with your circumstances to ensure you are entitled to a tax refund prior to making a claim to HMRC.
The expenses reimbursed/provided under the temporary workplace rules must be incurred by the employee in attending the temporary workplace and primarily includes the following: -
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