'I'll come into the office … provided you pay me to’

People who work from home say their commuting costs should be treated as a tax-deductible expense if employers want them to come into the office. That is the main finding from a new survey conducted by Office of Tax Simplification, the independent adviser to the Government on tax matters.  

The Telegraph reports on this with their headline ‘I'll come into the office... but only if you pay me to’. As well as tax relief for commuting costs, the workers surveyed said they would like to benefit from the "cycle to work" scheme even if they do not cycle into work. Currently at least 50pc of the journeys made on a bike provided through a cycle to work scheme must be between home and a workplace, according to HMRC's guidance. This condition was removed in lockdown before being reinstated from April 2022, but hybrid workers – those who work partly from home, partly in an office – would like it to be removed permanently.

But the main finding from the OTS survey is workers wanting tax relief on their commuting costs if their employer calls them into the office. So, as things stand, is that a valid request and how would you respond. To help with that, on the line from Birmingham, tax specialist Chris Thomas: respond to that?

Chris Thomas: “It's certainly a very interesting one and I think there's a wider point here in that I do know that there are some employers that have been receiving requests along these lines from employees and you can see where that's coming from because, obviously, a lot of employers are quite keen to get their workforce back into the office on a more regular basis and, clearly, that does entail costs from the employees’ perspective, which they might have got used to not paying during the pandemic, particularly if we're talking about people who've maybe moved a bit further away during COVID, who've got quite long or expensive commutes into London, or whatever the case maybe. So, you can certainly see why that might be something that's considered quite attractive by employees. I think it’s worth noting on this point the Office for Tax Simplification who have written this report, which this derives from, do note that very few employers they spoke to actually did have any such policy or, indeed, intended to introduce one, and you can see why that would be because, clearly, it's a bit of a can of worms, isn't it, it could become quite expensive, it could be difficult to manage. So, I don't think it's something that we are actually seeing a lot of employers doing, or seriously contemplating, but on the other hand, you know, given the whole kind of war for talent situation we've got at the moment, I do think employers are looking at (a) is there a way that we can tax efficiently pay travel expenses and (b) I think, also for some help in navigating what can be a very tricky set of rules – HMRC’s  guidance runs to over 100 pages which, I think, tells you quite a lot in terms of how complicated it is.”

Joe Glavina: “Just going back to this article that the telegraph says they say as well as tax relief for commuting costs, the workers to survey said that the lack of freight from the cycle to work scheme, if they don't cycle to work. Well, what do you make of that?”

Chris Thomas: “That is another interesting one because, obviously, there is a condition in the cycle to work scheme, I think it's supposed to be 50% of the cycle’s use, if I recall correctly, is supposed to be in cycling to work and, clearly, that is the whole premise of it. On the other hand, however, it is next to impossible for any employer to ever monitor what the employee does or doesn't do with their bike outside of work and I think a cynic might say that for quite a number of years there's probably a lot of people who have acquired bikes through cycle to work, who, perhaps don't cycle to work all that often. But, obviously, the impact of COVID, and now the new hybrid working patterns, is that it's harder to meet that condition. So, if you're only going to the office two or three days a week, clearly, unless you're hardly using your bike at all outside of that, then it's going to be more difficult to meet that condition. There is a suggestion in the report, and I think it's a valid one, that actually perhaps the qualifying conditions ought to be relaxed because we do, obviously, want to encourage people to be using bikes on days they do go into the office, and just generally as a mode of transport as a public policy point, so there is a suggestion that, perhaps, that shouldn't be amended, but I think, to be honest, it's one of those where, well, even if it isn't, strictly speaking, no one is ever going to be in a position to know so it's probably not a major point in practice.”

That OTS report on hybrid and distance learning was published on 20 December and makes for interesting reading, perhaps mapping the way for future changes to the tax laws in this area. We have put a link to it in the transcript of this programme.

LINKS
- Link to OTS report on hybrid and distance working