ESM3225 - Application of the tax rules: travel expenses - example

The legislation treats all engagements as being part of a single employment with the intermediary. Therefore, the rules in respect of travel expenses should be applied on that basis when working out whether the place of work is temporary or permanent.

For example:

Mr C, an IT contractor provides his or her services through a limited company (which he owns) C Services Ltd. The company has a series of contracts under which his services are provided to different clients around the country. Mr C regularly travels from his home to work at the premises of the company's clients. He meets the expenses of that travel personally.

Provided Mr C does not expect to spend more than 40% of his or her working time at any one site he is entitled to a deduction for all journeys from home to the client's premises. If he does spend more than 40% of his time at a single site, but the engagement is both expected to, and actually does, last for no more than 2 years, a deduction for travel costs will also be available.

See SE32000/ EIM32000 onwards for further guidance on the application of the travel rules.