If there is any question I’ve asked more times than any over my tax career, it’s “How much business travel do you do? The number of different responses I’ve had has been equally as numerous!

The area of business travel is relevant to each person regardless of whether they are employed, self-employed, business owner or employee, so it’s no surprise that it is so common. Indeed, I would expect that if you are reading this today and haven’t had to deal with the subject, you would be in the minority.

Despite being such a significant part of our tax system, it is most probably one of the most misunderstood concepts I’ve seen. This is hardly surprising as the tax definition of “business travel” is so detailed, HMRC have produced a whole booklet on it, stretching to some 77 pages in the last edition (HMRC Booklet 490).

In order to try and unravel some of the confusion which accompanies this subject, this article aims to:

• summarise the main points into easy bitesize chunks
• provide an outline which will determine whether a journey qualifies for business travel or not

Key Definitions

Before we launch into how we establish whether a journey qualifies as business travel or not, there are some key definitions we need to be aware of:

Business purpose

• travel is to enable an individual to carry out their business duties e.g. delivery driver, or
• travel is taking them to place where business duties can be carried out.

Non-business purpose

• just for clarity, this is any travel which isn’t for a business purpose!

Permanent workplace

• a place that is attended to perform business duties, and

• is attended regularly i.e.
  • often (e.g. daily, weekly, monthly)
  • follows a pattern (every Tuesday, first Monday every month…)
  • expected to continue for more than 24 months at outset of contract

Temporary workplace

• a place which is attended to perform business duties, and
• is attended for a limited duration (24 months or less), or
• is for a temporary purpose i.e. performance of a specific task, unconnected to any previous ones.

Non-workplace

• any place that isn’t attended for the performance of business duties
• home

Associated workplaces

• Are different workplaces:
  • within the same group of companies
  • between associated companies
  • between joint venture partners

Establishing Business Travel

In establishing whether a journey qualifies for business travel then use following steps in conjunction with the definitions laid out above.

Step 1 – Is the journey for a business purpose?

• If the answer is NO, then there is no business travel; this is regardless of the start or end points.
• If the answer is YES, then go to step 2

Step 2 – Establish the status of the starting and ending point of the journey

Step 3 – Using the journey matrix below to establish the nature of the journey

Journey Matrix

1 – Only if between associated workplaces

To Finish….

This summary has just scratched the surface when it comes to business travel and has hopefully given you some basics to work with. However, the whole subject is much more involved as it extends into areas which are outside the scope of today’s article. These include, but are not limited to:

• construction projects
• fixed term contracts
• depots
• geographical area workplaces
• foreign travel
• anti-avoidance (i.e. turning what is, in reality, a non-business travel journey into a business journey through the introduction of an artificial step)

As with any area of employment taxes, if in doubt it is always best to seek the advice of a tax professional as it will save you a lot of time, energy and money later on!

All the best.

Matt

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