Temporary workplace rules – not always as straightforward as you may think…

The recent outcome of the Sambhi v HMRC case has brought to light the complexities and lack of case law surrounding the temporary workplace rules, which govern the tax relief available on travel expenses and subsistence payments for employees working at a ‘temporary workplace.’ This case underscores the importance of understanding these rules to determine whether employees are entitled to tax relief for their travel and subsistence expenses.

Taking a step back, before establishing if any relief is available, it must be considered if the workplace will be considered temporary. The following scenarios outline where a workplace will qualify as temporary:  

• The employee attends the workplace to perform a task of limited duration, that lasts or is likely to last for a period less than 24 months, unless the employee attends it in the course of a period of continuous work defined by HMRC as more than 40% of the employee’s time (i.e. a fixed term contract at one location for a period of less than 24 months will not qualify as temporary).   

Or 

• The employee’s attendance at the workplace is for a period of more than 24 months, but their time there will represent less than 40% of their overall working time.   

While the above scenarios appear relatively straight forward to apply, a great deal of caution must be exercised where operating these rules as the Sambhi v HMRC 2020 case identified.  

In this case, the individual worked in the construction industry on projects across Greater London, with his time on each not exceeding 24 months. In respect of each project, his employer paid his travel, subsistence and temporary accommodation costs.  

Ordinary Commuting vs. Temporary Workplaces

One of the key issues in the Sambhi case was whether the employee’s travel could be classified as ordinary commuting or as travel to a temporary workplace. Ordinary commuting, which involves travel between an employee’s home and their permanent place of work, does not qualify for tax relief. In contrast, travel to a temporary workplace may be eligible for relief, provided the conditions are met.

In this case, despite the employee working across various locations, HMRC considered his place of work to be permanently linked to a broader geographical area—Greater London. This classification meant that the employee’s travel was seen as ordinary commuting rather than travel to temporary workplaces, thus disqualifying him from tax relief on his travel expenses.

On review of the position, HMRC denied tax relief on the travel and subsistence costs as although the individual was working at each site for less than 24 months, there was not a ‘substantial impact’ on the individual’s journey to work on each project.  

While this condition is not specifically clear from the temporary workplace guidance, it is important that in order for relief to be available, there must be a ‘substantial change’ in the location to which the individual is required to work. However, there is no statutory guidance on the term ‘substantial’ and no clarification was given during the case as to what a sufficient distance between work locations would be to give a ‘substantial change’.  

What we can take from this case is that while the individual was required to work across a number of locations for temporary duration, they were considered to have a permanent place of work linked to a geographical location, being the whole of Greater London. This is something that employers with field based employees or individuals working across a number of different sites must be mindful of specifically where travel and subsistence costs are provided.  

If you have employees working across different locations or have any queries on employee travel and subsistence costs, we are here to help. Please contact Niamh McKenna or your usual AAB contact. 

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