The 490 is HMRC’s guidance on the Income Tax and National Insurance Contributions for employee travel.
It is their interpretation of the legislation and how they will apply this in practice. This is an area that can be summarised as identifying whether the travel is classed as ‘ordinary commuting’. This means tax relief is not available where travel is between a permanent workplace and:
- Home
- Any other place which is not a workplace
Therefore, it is necessary to determine whether a place of work is permanent or considered permanent. For example, tax relief is not available on the travel costs of an individual going from home to the office.
However, it is not as simple as that in these times of hybrid and flexible working arrangements. HMRC have realised this and updated Chapter 3 of their manual with section 3.39. The example refers to a working arrangement where it is agreed between employee and employer that there is a choice to work at home. In this instance, the office is still regarded as the permanent workplace and tax relief is not available on the travel costs of the employee when they attend the office.
For Bookkeepers
Travel costs are a complicated area of taxation and social security. However, when simplified, it is all about determining whether HMRC regard the workplace as permanent (which can also be a geographical area rather than a single location)
- If an employee chooses to work from home and the employer allows this, any travel to the workplace (the office) is considered ordinary commuting and tax relief is not available – as outlined by the new example 42 at section 3.39
- However, if the contractual arrangement is that the employee works from home and the employer considers this to be their permanent workplace, any travel to the office is NOT considered ordinary commuting and tax relief IS available – as outlined by the examples 39, 40 and 41 at section 3.39
It’s all about the contractual arrangement that defines the workplace.
