Expenses from working away from home

BM writes: I have been employed as a computer programmer for a small software house for the last 5 years and I have been working away from home for about the last 6 months on a large project. The company has been paying my accommodation costs and my additional travel expenses as I return home every weekend. Could you confirm that I will not be taxed on the payment of these costs? Secondly I have been looking at other options as I expect to be working on this same contract for another 6 months and wondered whether the same would apply if I rented a property locally and stayed some weekends rather than travelling home every weekend. Would there be any change in the tax position on the assumption that my employer is still happy to pay the additional costs?

Answer

The HM Revenue & Customs (RC) limit for a temporary place of work is 2 years, writes Chris Lane, a partner at Kingston Smith. In addition it has to be the expectation that the length of the temporary place of work is going to be less than 2 years. Therefore in your situation it looks as though the assignment is going to last 12 months and as long as there was no expectation at the beginning that this work was going to exceed 2 years it will be classed as a temporary place of work and the expenses that you are reimbursed will not be taxable on you and the costs will be an allowable deduction for the company.

The total reimbursed costs in a tax year will be included by the company on a form P11D. These have to be submitted to the RC by the 6th July each year. You will then need to complete an individual claim that theses costs were incurred wholly, exclusively and necessarily in the course of your work and they will then not be treated as taxable by the RC.

If both you and your employer were happy for you to stay in a rented property rather than a hotel then the costs would be treated in the same way as your current costs. Of course the additional living expenses at the weekend would not be a valid claim in the same way and would be taxable on you if paid by your employer.