Builder wants tax rules governing travelling

I manage a building company that recently had a PAYE inspection, resulting in a large payment to the Inland Revenue. The main problem was our policy of reimbursing travel costs to some of our workers. While I understand that travel costs between home and office cannot be repaid for our office-based staff, I thought the costs of travel from home to one of our contract sites could. What can I reimburse tax-free, and have the rules changed?

Answer

The rules changed, starting on April 6, so the changes do not apply for the period of your recent Revenue inspection. In the years for which the Revenue inspected your records, payments for travel between home and office would have attracted a tax charge. However, where a worker travelled from home to a temporary workplace, relief was available on the lower amount of the cost of travel between the normal place of work or the worker´s home and the temporary workplace. There was one important exception to this rule in that this treatment did not apply to workers whose normal place of work was a site. The new rules mean such a worker will not now be considered to have a permanent place of employment and consequently any reimbursement of travel costs between home and site will not be taxable. This assumes that your staff travel directly from home to site; if however they travel via your office the only expenses that would not be taxable would be those incurred for travel between your office and the site. The Revenue has issued a booklet (IR61) entitled Tax Relief for Employees´ Business Travel, which gives details of the new rules.