SE32005 - Travel expenses: 1998/99 and later years - introduction - new travel rules

Section 61 FA 1998

Section 61 FA 1998 amends Section 198(1) ICTA 1988. It introduces new rules for deductions from emoluments for the cost of employee travel. Equivalent rules have also been introduced for National Insurance Contributions, see NIM06250. The new rules apply to expenses incurred in 1998/99 and later years, see SE31625. Do not agree to apply the new rules to 1997/98 or earlier years.

In relation to travelling expenses the old version of Section 198(1) allowed a deduction where

'the holder of an office or employment is necessarily obliged to incur and defray out of the emoluments of that office or employment the expenses of travelling in the performance of the duties of the office or employment…'

The new version of Section 198(1) allows a deduction for 'qualifying travelling expenses'. These are defined by Section 198(1A) as

'(a) amounts necessarily expended on travelling in the performance of the duties of the office or employment, or
(b) other expenses of travelling which –

(i) are attributable to the necessary attendance at any place of the holder of the office or employment in the performance of the duties of the office or employment, and
(ii) are not expenses of ordinary commuting or private travel.'

The key phrases used are defined in Schedule 12A ICTA 1988 and are explained and illustrated by this Chapter.

From 2002/03 further changes have been made that affect the amount of relief to which employees who use their own vehicle or bicycle for business travel are entitled. The changes are summarised at SE31626.