Contractors' Questions: Am I due tax relief on mileage?
Contractor's Question: HM Revenue & Customs has written asking me to fill in an employment record form. One of the sections asks for the address where I work if it is different from my employer's address. As my employer is an umbrella company, I can currently claim tax relief on my mileage as I can say that my usual place of work is different to that of my employer. I am concerned that if I fill in the-said section, then HMRC will assert that since my stated 'usual' place of work is different to my employer's then I cannot claim the mileage. Should I just leave the section blank?
Expert's Answer: In simple terms, if you attend the same workplace for a period of less than 24 months and you do not attend the same workplace for the entire period of an employment, then you should be eligible to claim tax relief on travel to and from that workplace.
For example, if you complete a 6-month contract at your current workplace and then leave your employer (in this case your umbrella company), you have attended the same workplace for the entire period of your employment. You will therefore not be entitled to claim relief.
If you complete a 6-month contract at your current workplace and then secure a further 6-month contract through the same umbrella company, you will not have attended the same workplace for the entire period of your employment and you will not have attended the same workplace for more than 24 months. You should be entitled to tax relief on your travel to and from both workplaces in this instance.
Not everyone's circumstances are straightforward and it is always worth researching your own situation to avoid what can be a substantial tax bill if you get it wrong. Booklet 490 (Employee Travel) , has further guidance and some useful examples of both simple and more complicated situations.
To address your question directly, the fact that your actual place of work is not the offices of your umbrella company does not automatically qualify you for tax relief. If you have attended the same workplace for the entire period of your employment, it will probably not be deemed as temporary, and no tax relief should be claimed. My advice would be to be honest with HMRC and determine whether or not you should actually be claiming travel expenses. Your umbrella company should also be able to offer further guidance.
The expert was Marc Scott, of Liberty Bishop , an umbrella company and supplier of accountancy solutions for contractors.
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