home worker travel expenses

Remote & Async Work — 11 min

Tax Deductions & Expenses Available To Remote Workers

Remote work became popular during the COVID-19 pandemic and is here to stay. More and more people are choosing to work from home. As a remote worker, you can take certain tax deductions for your business expenses. However, only some remote employees are applicable to these tax deductions.

Are There Tax Deductions for Remote Workers?

Does working remotely make me an independent contractor, 6 remote work tax deductions, know your tax returns and filing options.

Since the 2018 tax reform, generally only self-employed people can claim tax deductions for remote work. Some exceptions to this classification include performing arts, government officials, and people who are in the military reserve forces.

That means remote employees , or people who work for another company, can no longer claim tax deductions for their work from home. Instead, employees should ask for reimbursements from their employers. There are exceptions to this law. Some states have their own laws that let employees take deductions for unreimbursed expenses on their state tax returns.

If you worked from home as an employee of a company during the tax year, you typically cannot claim home office expenses related to your work. If you were self-employed in some capacity, you could deduct home office expenses. That means you were working as both an employee and a self-employed individual with a side business. Deductions for your home office expenses must be related to your self-employed taxable income rather than income from your employee work.

The short answer is: no. Many people work remotely as employees of companies. That has become increasingly popular as a result of the pandemic as many employees enjoyed their remote working experience. In those cases, the workers are classified as remote employees instead of independent contractors.

An independent contractor is a self-employed individual who provides services and is not classified as an employee. Self-employed workers can claim tax deductions for business expenses and for working out of a home office. 

Employees who work side gigs in addition to their employee work may also qualify for certain deductions related to their self-employed work. 

Only self-employed individuals can claim eligible deductions for business expenses. Because there are so many people working remotely, the Internal Revenue Service (IRS) has strict guidelines on who can claim deductions and what expenses they can claim deductions for. As such, keeping accurate records of any expenses you want to claim as a deduction is essential. 

Keep a written record or log book in case you have to show proof of your deductions. You should also keep payment records made for any tax-related spending. That may mean saving credit card statements, bank statements, checks, or itemized receipts. The digital records of these documents will usually suffice. If paying in cash, make sure to get a receipt with who you paid the cash to, the payment date, and the amount.

Work from home tax deductions may include: business expenses, tools and utility expenses, business meals and travel expenses, and home-related expenses, including home office deductions.

Deductions for Business Expenses

Any expenses you deduct have to be directly related to your business. Common deductions are expenses that are typically allowed for office-based companies , including:

Equipment (computers, software, office furniture)

Repairs and maintenance

Home depreciation

Deductible mortgage interest

Advertising and promotions

Banking fees

Depreciation for a home you own

Tools and Utility Expenses

Some self-employed business owners may purchase property and equipment for their business that can be claimed as an expense for the deduction. According to the IRS, to file claims regarding property, you must meet the following criteria:

You must own the property, and it must be used to make money.

You should be able to give an estimate of how long you can use the property to make money with it. 

You must be able to use the property for more than one year. You cannot purchase and dispose of the property in the same year.

Self-employed workers can deduct up to $1,050,000 for qualified business equipment. Business equipment includes computers, printers, office furniture, and supplies like paper or ink. 

Business Meals and Travel Expenses

You may deduct the business miles traveled on your tax return if you travel for business. Whether you take a long trip abroad or travel short distances in your city does not matter. You can claim the deduction in two ways: the actual expense incurred or the IRS standard mileage rate. 

If you use the standard mileage rate, keep a log of miles driven to separate personal and business use. In 2022, the rate has increased from 58.5 cents per mile to 62.5 cents per mile. It’s a good idea to check the mileage rates every year, as they typically change.

If you claim deductions for your car expenses, make sure to keep track of all your car-related expenses. They may include payments, registration, insurance, rent for parking, licenses, repairs and maintenance, and parking and toll fees. If you pay for other transportation fares, such as air, bus, or train, you may also include those as travel expenses. You can also deduct the costs for restaurant meals and entertainment as long as they are business expenses.

Home-Related Expenses

You may make home-related deductions if you are self-employed in some capacity. That means being an independent contractor or working as an employee with your self-employed business. 

Your home office can be claimed as a business expense if it is for and supports your self-employment and not your job as an employee. For phone and internet expenses, you can split them between your self-employment work, employee work, and personal expenses. 

Home Office Deductions

Your home office must be used exclusively and regularly for your self-employment for you to make home office deductions. If you qualify, you may be able to make extra deductions for home-related expenses, such as mortgage, property taxes, homeowners insurance, and utilities.

The IRS is serious regarding what it means to use a space exclusively and regularly. The exclusive-use rule states that the space can only be used to conduct your self-employment business and nothing else. If you share your home office between your self-employed business and your job as an employee, you will not be able to claim the home office as a tax deduction. 

You must use the portion of your house, apartment, condo, or similar living space for your business on a regular basis. That also includes structures on your property, such as a detached studio, barn, greenhouse, or garage. 

Your home office must also be either the principal location of your business or where you regularly meet with customers or clients. 

If you have a space for your self-employment work that’s separate from your employee job, you can claim eligible expenses for your self-employment space as deductions. However, the expenses for your employee space cannot be claimed as deductions.

To calculate your home office business percentage, you compare the number of hours of operation to the total number of hours in the year. Divide the business hours by the total number of hours to get a percentage of available hours, then multiply that number by the percentage of your house used for business to get your business percentage. 

There are two methods for calculating your home-office deductions for business use: the standard method and the simplified method. 

The Standard Method

The standard method, also known as the direct method, has no maximum deduction limit. To make home office deductions this way, you need to keep track of all your home office expenses, including costs related to repairs and maintenance. 

You can also claim other expenses based on the percentage of your home office space compared to the rest of your home. 

To calculate your home office tax deduction, divide the square footage of your home office by the square footage of your entire living space. This gives you the percentage of your home that is dedicated to your home office. You apply this percentage to your home expenses to determine what amount might be a business expense.

For example, suppose the office measures 150 square feet and the total area of the house is 1,500 square feet. To calculate your home office tax deduction, take 150 and divide it by 1,500 to get 10%. That means the business percentage is 10%.

If all the rooms in your home are about the same size, you may calculate your deductions using a more straightforward method. In that case, you divide the total number of rooms in the house with the number of rooms used for your business to get your business percentage.

The Simplified Method

This is a simpler method compared to the standard method to determine your home office deduction. You can claim as an expense $5 per square foot of your office, up to 300 square feet. To calculate the tax deduction, you take the total square footage of your office and multiply it by $5, for a maximum of $1,500 per year.

If you choose to use the standard method and you own your house, you need to consider the depreciation of a portion of the house. You do not need to calculate this when using the simplified method. However, since the standard method has no maximum deduction limit, you may get a more significant deduction using the standard method.

Fortunately, you can switch between the standard and simplified methods every year. You may choose to switch methods without having to provide a reason. Before choosing one to file taxes , consider calculating both methods to determine the most significant deduction possible.

License Fees and Expenses

Any educational expense is potentially tax-deductible. That means costs spent on taking online or college courses, buying professional development materials, and paying licensing fees can all be deductible. You may also include subscriptions to trade or professional publications and donations to business organizations. 

These are usually determined as necessary for self-employed business owners to continue to grow their businesses. You can deduct items you have purchased to improve your job or business. Remember to save receipts of materials and courses purchased in case you need them. 

You should consider two tax forms when making these deductions on your tax returns: Schedule C and Form 8829.

Schedule C is a short form you need to complete if taking the simplified method for your home office tax deduction. 

Form 8829 helps you determine what you can claim for your home office deductions. The form consists of four parts:

Part 1: You calculate the part of your home used for business to get your business percentage. For most businesses, you calculate the square footage used exclusively for your business by the total square footage of your house. 

Part 2: You list your total business income and your deductible expenses. The form will take you through how to reach your total allowable expenses for the business use of your home.

Part 3: You calculate the depreciation of the business portion of your home. The form includes instructions on how to determine your allowable depreciation percentage. 

Part 4: In this final section, you determine any expenses that can be carried over to the next tax year. 

Becoming familiar with eligible tax deductions and expenses can help you save and make better decisions for your business as a self-employed business owner. It would be wise to consult a tax professional to better understand your taxable income for your remote job. 

To save even more, think about long-term strategies for reducing taxes. That may entail setting up a defined benefit pension plan or paying yourself rent for using a building you own for business.

Remote is reimagining the future of work. Our team of experts worldwide has the experience and knowledge to help you more easily determine tax deductions and expenses available to remote workers. Access our toolkit for expert insights on landing the best remote opportunities.

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Remote Work Tax Implications, Home Office, Travel, and More

At a Glance

Main Takeaway

Remote work has grown increasingly popular in the past three years, with many businesses opting for flexible, work-from-home options for their employees. Nearly 16% of U.S. companies are fully remote, and 66% of employees work remotely part-time. About 36.2 million employees are expected to work remotely by 2025.

With this shift in the workplace comes new remote work tax implications for businesses, making it crucial for companies that use remote or hybrid work arrangements to understand potential tax liabilities in different states as nexus is established.

Explore remote work tax implications that may affect your business and how Windes business tax services can help you navigate remote work tax considerations to help you take advantage of tax credits and incentives in 2023.

Business Considerations

Hiring remote employees creates unique considerations for your business, both internally and externally. Your company must prepare for the accounting and tax preparation tasks of managing remote employees, such as payroll requirements, state nexus establishment with subsequent registrations, and home office and travel reimbursements to employees through corporate policies.

Determining a Tax Home for Employees

A tax home refers to an employee’s regular place of business or post of duty, regardless of where they live. The tax home determines an employee’s tax liability and which state’s tax laws apply to the employee’s income.

To determine an employee’s tax home, you must consider where they perform most of their work duties. If an employee lives in Kansas and performs their work from a home office, their work home would be the state of Kansas, even if your business is domiciled or located in California.

An employee’s tax home can affect tax obligations to the applicable state or local governments. For example, your company may have to register and pay taxes in Illinois if an employee’s tax home is there and your business is in California.

Considerations for Payroll Reporting

If you hire remote workers outside your current state(s) of registry, certain thresholds can trigger payroll reporting requirements in those newer states. Reporting thresholds include the number of days worked in-state, the amount of compensation throughout the year, or location criteria. For example, employers with workers in Texas must use the state’s location of services checklist to determine if they must report their wages to Texas.

Preparing payroll taxes for remote employees can be complex for employers. Understanding your state’s filing requirements is vital to reporting compliance and minimizing tax liability. For example, if your business is based in California, you must withhold income tax if an employee lived in the state for at least half the year.

Establishing Nexus for Employees Who Work Out-Of-State

When your company hires a remote employee with out-of-state payroll, you may establish a new nexus related to sales tax , also known as a physical presence, in that state. This happens when the worker creates a taxable connection between your business and the state where they reside.

Establishing nexus may result in additional filing requirements and the responsibility to report sales revenues in those states. Specific criteria for establishing nexus vary by state but are based on factors such as the number of days worked in-state, the amount of compensation received, and the type of work performed.

For example, in California, a business establishes nexus if it is “ doing business” in the state , such as having employees, owning or renting property, or storing inventory there. California is a state where a small amount of activity will lead to multiple tax types.

If a business has established nexus in California, it must register with the California Secretary of State and obtain a California Seller’s Permit. The company must also collect and remit California sales tax on taxable sales made to customers in California.

To determine if nexus has been established, seek the advice of a tax professional at Windes. We can help you determine if you have a nexus in the state and ensure you comply with relevant regulations.

Using IRC Section 139

The COVID-19 pandemic was declared a disaster by the federal government, and the covered period for expenses to qualify under Section 139 started on March 13, 2020. IRS Section 139 is a provision that offers tax-free treatment for disaster relief payments made by employers to their employees.

To be eligible for tax-free treatment under Section 139, disaster relief payments must be reasonable, necessary, and directly result from the declared disaster. Wages do not fall under the definition of a Section 139 payment.

While you still have the option to provide disaster relief payments and other support to employees related to the COVID-19 pandemic, the expenses must meet the definition of a qualified payment under Section 139. These benefits are set to expire on May 11, 2023 , making it essential to work with a tax planning partner like Windes to help you take advantage before they end.

Providing Home Equipment

Employers can generally reimburse employees for certain home office expenses through an accountable plan. This plan must meet the ordinary and necessary business expenses criteria under IRC Section 162 .

According to the IRS, expenses related to remote work include the cost of home office items like monitors, printers, phones, and office supplies, the cost of installing new or expanded internet service, and the cost of increased utilities.

These expenses are tax deductible for the employer as long as they are reimbursed under an accountable plan. Your business can hire remote employees and provide necessary equipment without an additional tax burden; however, you must provide records of the stipend or reimbursement used for tax reporting to deduct the expenses.

Commuting and Travel Reimbursements

If your business hires remote workers, you may face challenges in determining what travel or commuting expenses to reimburse, which you can deduct from the company’s taxes.

As a general rule, commuting costs between an employee’s home and work are not reimbursable to the employee nor deductible for the employer. However, if an employee’s home is their primary place of work under IRC 280A, you may reimburse them for travel between their home and other required worksites they visit in a business-related capacity.

For example, California requires reimbursement for travel expenses such as lodging, food, and gas. When taking on remote employees in California or another state, you must consider policies that take into account the reimbursement of travel and commuting costs.

You can work with the tax professionals at Windes to implement tax planning strategies like revising your compensation structure or limiting the required number of in-office days to maximize deductions and minimize liability for this tax issue.

Establish Beneficial Tax Planning Strategies With Windes

Engaging a remote workforce is necessary for many businesses in the post-Covid landscape. Although a remote or hybrid arrangement can offer new opportunities for your business, it also brings on unique challenges regarding tax liabilities & reporting, and accounting operations.

Contact the tax professionals at Windes to help your business enact a tax planning strategy that allows you to take advantage of all credits, deductions, and incentives available in your state of operation.

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Hiring Remote Employees: Travel Reimbursement, Home Offices, and More

Many businesses have transformed since the COVID-19 pandemic. Organizations experiencing human resource constraints are getting more creative when it comes to retaining and recruiting employees—including a growing remote workforce. But hiring remote employees can create uncertainties for companies to navigate.

Remote Working Tax Implications

Explore these frequently asked questions related to remote working tax implications.

• What’s the definition of tax home?
• What are considerations for determining payroll reporting?
• What’s the impact of remote employees on nexus?
• Can internal revenue code (IRC) Section 139 still be used?
• What are business considerations when hiring remote employees?
• What are the options for providing home office equipment?
• How can a company reimburse home office expenses?
• How is commuting defined and applied to travel reimbursements?
• Can employees working from home write off their office spaces?
• How is the convenience of employer rule used to determine travel reimbursement?

Generally, an employee’s tax home is the regular place of business or post of duty, regardless of where they live. It includes the entire city or general area of a business or work location.

The IRS hasn’t published updated guidance following the COVID-19 pandemic. Thus, taxpayers should follow previous rules and guidance and apply them to their specific facts and circumstances.

It’s important for businesses to understand the definitions of both home and office in relation to flexible workforces for employees who can be:

• 100% remote
• Working in the field

The remote workforce ushered in by the COVID-19 pandemic seems here to stay, resulting in the need to meet new payroll reporting requirements.

If a company has remote employees in a state where it hadn’t already registered, there will be certain thresholds being met that could call for registration in states where those employees are located.

If certain thresholds are met, such as the number of days worked in-state or amount of compensation, then the company needs to register for payroll reporting with those states. Note that the company may be required to complete other registrations with the state aside from just income tax withholding.

Employers will want to remind their employees of their individual tax reporting obligations. Given that employer withholding taxes are based on employee residence, employees need to understand the individual filing requirement in their own states as opposed to where the company is located—unless there’s reason to file in the state where the company is located.

An example reason for filing in the company’s state would be if the employee visits the office location in the other state and meets the states specific thresholds for personal income tax filing requirements, among other possible personal reasons for activity in that state.

When a company has a remote employee with out-of-state payroll, that typically creates nexus in that state for the company, unless a specific exception is met. When nexus is established, also known as physical presence, a company can create additional filing requirements for themselves, in addition to having to withhold income taxes on the employee’s wages.

A company is typically recognized as doing business in a state when any remote employee located there works for the company. This employee could establish nexus, possibly creating new income, franchise, and sales and use tax obligations.

IRC Section 139 deals with disaster relief payments from the employer that are generally tax free to the recipient. The COVID-19 pandemic was declared a disaster by the federal government and the covered period for expenses to qualify started March 13, 2020.

Section 139 disaster relief payments need to be reasonable, necessary, and the result of the declared disaster. Wages aren’t considered a Section 139 payment. IRC Section 139 can still be used related to the COVID-19 pandemic if the expenses meet the definition of a qualified payment under IRC Section 139.

If an organization is interested in providing disaster relief payments and other support to employees under Section 139 for other payment related to disaster relief (COVID-19 or otherwise), the organization could implement a policy for these types of payments.

When hiring remote employees, there are several business considerations that should be thought, both internally and externally. Below is a list of items to be considered.

• Well documented working arrangements, such as through employment agreements
• Additional administrative tasks of having remote employees
• Payroll requirements and registrations with the states, such as state tax withholding and unemployment taxes
• State nexus establishment and adding new footprints in new states

Internal Revenue Code (IRC) Section 162 permits employers to reimburse employees for legitimate job-related expenses deemed ordinary and necessary, such as a computer, monitors, printer, or internet service.

An employer has many options on how to structure home office reimbursement expenses, such as a stipend or reimbursement policy. What’s important is that it be made under an accountable plan , meaning, a set of procedures that ensures that employees don't get reimbursed for personal expenses.

An employer can reimburse employees for certain home office expenses through an accountable plan. As discussed above, the main factor for reimbursement is the IRC Section 162 standard of an ordinary and necessary business expense.

According to the IRS, ordinary and necessary expenses related to the COVID-19 pandemic can include a range of expenses related to remote work, health care, and childcare, such as:

• Home office items, such as monitors, printers, phone, and office supplies
• Cost to install new or expanded internet service
• Cost of increased utilities

Would Reimbursement be Taxable or Nontaxable?

The accountable plan allows employees to receive tax-free money for expenses while the employer deducts the expense. An employer should be ready to substantiate the business connection and cost of the expense.

Transportation expenses between an employee’s home and the main place of work are considered commuting expenses.

Daily transportation expenses employees incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses, with some exceptions.

One can deduct daily transportation expenses incurred going between the residence and a temporary workstation outside the metropolitan area where they live.

Daily transportation expenses can be deducted if an employee has one or more regular work locations away from the residence or the residence is the principal place of business, and they incur expenses going between the residence and another work location in the same trade or business.

Travel expenses are the ordinary and necessary expenses for traveling away from the home for the job. Generally, a tax home refers to the entire city or general area of a main place of business or work, regardless of where a family home is.

The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the miscellaneous deduction for home office expenses for tax years 2018–2025, making employees not eligible to claim the home office expense deduction.

Convenience of employer generally means that daily transportation expenses incurred by an employee between the primary residence and employer’s office are personal expenses.

These personal expenses aren’t eligible for either a deduction by an employer under section 162(a)(2) or tax-free reimbursement to an employee—unless they’re excluded as qualified transportation fringe benefits. This rule is subject to exceptions, however.

For example, if an employee’s residence is the principal place of business, within the meaning of IRC Section 280A, then the transportation costs between the home office and employer’s office may be deductible by the employer and eligible for tax-free reimbursement to the employee.

We’re Here to Help

For guidance on the tax implications of a remote workforce, contact your Moss Adams professional. You can also visit our Tax Services page for additional resources.

Assurance, tax, and consulting offered through Moss Adams LLP. ISO/IEC 27001 services offered through Cadence Assurance LLC, a Moss Adams company. Wealth management offered through Moss Adams Wealth Advisors LLC. Services from India provided by Moss Adams (India) LLP.

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Managing business travel expenses

Working from home expenses & allowance.

Here at Travelperk, our workplace management team was quick to respond to the new demands of WFH. They were able to quickly recognize what we could and could not supply and set up expense processes for the cost of purchasing or transporting essentials.

What are working from home expenses?

• A reliable internet connection—either an unlimited business broadband service or a cellular backup based on a mobile router, like a Mifi dongle
• A laptop or computer,—as well as additional hardware such as a laptop riser, an external keyboard and mouse, and a second (or third) monitor
• Specialist software—you’ll need the right tools to carry out your job, in addition to communicating and collaborating with your team
• Appropriate furniture - get your desk set-up feeling comfortable with an ergonomic chair

What work from home expenses can you (or your employees) claim?

Hmrc and working from home expenses, what working from home expenses do you not have to cover, how can employees calculate working from home expenses, how can businesses track and collect working from home expenses.

At TravelPerk, we use Expensify to allow our employees to make expense claims. Working from home meant paper receipts were not an option, so it was good that we were already digital-first.

What home office equipment should you provide?

What is the nature of the work, call-heavy jobs,  large files and downloads, when is it easier to provide a home office stipend and avoid expenses.

Here at TravelPerk, we made the decision to provide staff with a general working from home stipend. We felt this was more time-efficient than asking people to make individual expense claims for recurring things like additional data usage or stationary. Only expenses that exceed the stipend are processed by our Finance team.

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How to Deduct Travel Expenses (with Examples)

Reviewed by

November 3, 2022

This article is Tax Professional approved

Good news: most of the regular costs of business travel are tax deductible.

Even better news: as long as the trip is primarily for business, you can tack on a few vacation days and still deduct the trip from your taxes (in good conscience).

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Even though we advise against exploiting this deduction, we do want you to understand how to leverage the process to save on your taxes, and get some R&R while you’re at it.

Follow the steps in this guide to exactly what qualifies as a travel expense, and how to not cross the line.

The travel needs to qualify as a “business trip”

Unfortunately, you can’t just jump on the next plane to the Bahamas and write the trip off as one giant business expense. To write off travel expenses, the IRS requires that the primary purpose of the trip needs to be for business purposes.

Here’s how to make sure your travel qualifies as a business trip.

1. You need to leave your tax home

Your tax home is the locale where your business is based. Traveling for work isn’t technically a “business trip” until you leave your tax home for longer than a normal work day, with the intention of doing business in another location.

2. Your trip must consist “mostly” of business

The IRS measures your time away in days. For a getaway to qualify as a business trip, you need to spend the majority of your trip doing business.

For example, say you go away for a week (seven days). You spend five days meeting with clients, and a couple of days lounging on the beach. That qualifies as business trip.

But if you spend three days meeting with clients, and four days on the beach? That’s a vacation. Luckily, the days that you travel to and from your location are counted as work days.

3. The trip needs to be an “ordinary and necessary” expense

“Ordinary and necessary ” is a term used by the IRS to designate expenses that are “ordinary” for a business, given the industry it’s in, and “necessary” for the sake of carrying out business activities.

If there are two virtually identical conferences taking place—one in Honolulu, the other in your hometown—you can’t write off an all-expense-paid trip to Hawaii.

Likewise, if you need to rent a car to get around, you’ll have trouble writing off the cost of a Range Rover if a Toyota Camry will get you there just as fast.

What qualifies as “ordinary and necessary” can seem like a gray area at times, and you may be tempted to fudge it. Our advice: err on the side of caution. if the IRS chooses to investigate and discovers you’ve claimed an expense that wasn’t necessary for conducting business, you could face serious penalties .

4. You need to plan the trip in advance

You can’t show up at Universal Studios , hand out business cards to everyone you meet in line for the roller coaster, call it “networking,” and deduct the cost of the trip from your taxes. A business trip needs to be planned in advance.

Before your trip, plan where you’ll be each day, when, and outline who you’ll spend it with. Document your plans in writing before you leave. If possible, email a copy to someone so it gets a timestamp. This helps prove that there was professional intent behind your trip.

The rules are different when you travel outside the United States

Business travel rules are slightly relaxed when you travel abroad.

If you travel outside the USA for more than a week (seven consecutive days, not counting the day you depart the United States):

You must spend at least 75% of your time outside of the country conducting business for the entire getaway to qualify as a business trip.

If you travel outside the USA for more than a week, but spend less than 75% of your time doing business, you can still deduct travel costs proportional to how much time you do spend working during the trip.

For example, say you go on an eight-day international trip. If you spend at least six days conducting business, you can deduct the entire cost of the trip as a business expense—because 6 is equivalent to 75% of your time away, which, remember, is the minimum you must spend on business in order for the entire trip to qualify as a deductible business expense.

But if you only spend four days out of the eight-day trip conducting business—or just 50% of your time away—you would only be able to deduct 50% of the cost of your travel expenses, because the trip no longer qualifies as entirely for business.

List of travel expenses

Here are some examples of business travel deductions you can claim:

• Plane, train, and bus tickets between your home and your business destination
• Baggage fees
• Laundry and dry cleaning during your trip
• Rental car costs
• Hotel and Airbnb costs
• 50% of eligible business meals
• 50% of meals while traveling to and from your destination

On a business trip, you can deduct 100% of the cost of travel to your destination, whether that’s a plane, train, or bus ticket. If you rent a car to get there, and to get around, that cost is deductible, too.

The cost of your lodging is tax deductible. You can also potentially deduct the cost of lodging on the days when you’re not conducting business, but it depends on how you schedule your trip. The trick is to wedge “vacation days” in between work days.

Here’s a sample itinerary to explain how this works:

Thursday: Fly to Durham, NC. Friday: Meet with clients. Saturday: Intermediate line dancing lessons. Sunday: Advanced line dancing lessons. Monday: Meet with clients. Tuesday: Fly home.

Thursday and Tuesday are travel days (remember: travel days on business trips count as work days). And Friday and Monday, you’ll be conducting business.

It wouldn’t make sense to fly home for the weekend (your non-work days), only to fly back into Durham for your business meetings on Monday morning.

So, since you’re technically staying in Durham on Saturday and Sunday, between the days when you’ll be conducting business, the total cost of your lodging on the trip is tax deductible, even if you aren’t actually doing any work on the weekend.

It’s not your fault that your client meetings are happening in Durham—the unofficial line dancing capital of America .

Meals and entertainment during your stay

Even on a business trip, you can only deduct a portion of the meal and entertainment expenses that specifically facilitate business. So, if you’re in Louisiana closing a deal over some alligator nuggets, you can write off 50% of the bill.

Just make sure you make a note on the receipt, or in your expense-tracking app , about the nature of the meeting you conducted—who you met with, when, and what you discussed.

On the other hand, if you’re sampling the local cuisine and there’s no clear business justification for doing so, you’ll have to pay for the meal out of your own pocket.

Meals and entertainment while you travel

While you are traveling to the destination where you’re doing business, the meals you eat along the way can be deducted by 50% as business expenses.

This could be your chance to sample local delicacies and write them off on your tax return. Just make sure your tastes aren’t too extravagant. Just like any deductible business expense, the meals must remain “ordinary and necessary” for conducting business.

How Bench can help

Surprised at the kinds of expenses that are tax-deductible? Travel expenses are just one of many unexpected deductible costs that can reduce your tax bill. But with messy or incomplete financials, you can miss these tax saving expenses and end up with a bigger bill than necessary.

Enter Bench, America’s largest bookkeeping service. With a Bench subscription, your team of bookkeepers imports every transaction from your bank, credit cards, and merchant processors, accurately categorizing each and reviewing for hidden tax deductions. We provide you with complete and up-to-date bookkeeping, guaranteeing that you won’t miss a single opportunity to save.

Want to talk taxes with a professional? With a premium subscription, you get access to unlimited, on-demand consultations with our tax professionals. They can help you identify deductions, find unexpected opportunities for savings, and ensure you’re paying the smallest possible tax bill. Learn more .

Bringing friends & family on a business trip

Don’t feel like spending the vacation portion of your business trip all alone? While you can’t directly deduct the expense of bringing friends and family on business trips, some costs can be offset indirectly.

Driving to your destination

Have three or four empty seats in your car? Feel free to fill them. As long as you’re traveling for business, and renting a vehicle is a “necessary and ordinary” expense, you can still deduct your business mileage or car rental costs even when others join you for the ride.

One exception: If you incur extra mileage or “unnecessary” rental costs because you bring your family along for the ride, the expense is no longer deductible because it isn’t “necessary or ordinary.”

For example, let’s say you had to rent an extra large van to bring your children on a business trip. If you wouldn’t have needed to rent the same vehicle to travel alone, the expense of the extra large van no longer qualifies as a business deduction.

Renting a place to stay

Similar to the driving expense, you can only deduct lodging equivalent to what you would use if you were travelling alone.

However, there is some flexibility. If you pay for lodging to accommodate you and your family, you can deduct the portion of lodging costs that is equivalent to what you would pay only for yourself .

For example, let’s say a hotel room for one person costs $100, but a hotel room that can accommodate your family costs $150. You can rent the $150 option and deduct $100 of the cost as a business expense—because $100 is how much you’d be paying if you were staying there alone.

This deduction has the potential to save you a lot of money on accommodation for your family. Just make sure you hold on to receipts and records that state the prices of different rooms, in case you need to justify the expense to the IRS

Heads up. When it comes to AirBnB, the lines get blurry. It’s easy to compare the cost of a hotel room with one bed to a hotel room with two beds. But when you’re comparing significantly different lodgings, with different owners—a pool house versus a condo, for example—it becomes hard to justify deductions. Sticking to “traditional” lodging like hotels and motels may help you avoid scrutiny during an audit. And when in doubt: ask your tax advisor.

So your trip is technically a vacation? You can still claim any business-related expenses

The moment your getaway crosses the line from “business trip” to “vacation” (e.g. you spend more days toasting your buns than closing deals) you can no longer deduct business travel expenses.

Generally, a “vacation” is:

• A trip where you don’t spend the majority of your days doing business
• A business trip you can’t back up with correct documentation

However, you can still deduct regular business-related expenses if you happen to conduct business while you’re on vacay.

For example, say you visit Portland for fun, and one of your clients also lives in that city. You have a lunch meeting with your client while you’re in town. Because the lunch is business related, you can write off 50% of the cost of the meal, the same way you would any other business meal and entertainment expense . Just make sure you keep the receipt.

Meanwhile, the other “vacation” related expenses that made it possible to meet with this client in person—plane tickets to Portland, vehicle rental so you could drive around the city—cannot be deducted; the trip is still a vacation.

If your business travel is with your own vehicle

There are two ways to deduct business travel expenses when you’re using your own vehicle.

• Actual expenses method
• Standard mileage rate method

Actual expenses is where you total up the actual cost associated with using your vehicle (gas, insurance, new tires, parking fees, parking tickets while visiting a client etc.) and multiply it by the percentage of time you used it for business. If it was 50% for business during the tax year, you’d multiply your total car costs by 50%, and that’d be the amount you deduct.

Standard mileage is where you keep track of the business miles you drove during the tax year, and then you claim the standard mileage rate .

The cost of breaking the rules

Don’t bother trying to claim a business trip unless you have the paperwork to back it up. Use an app like Expensify to track business expenditure (especially when you travel for work) and master the art of small business recordkeeping .

If you claim eligible write offs and maintain proper documentation, you should have all of the records you need to justify your deductions during a tax audit.

Speaking of which, if your business is flagged to be audited, the IRS will make it a goal to notify you by mail as soon as possible after your filing. Usually, this is within two years of the date for which you’ve filed. However, the IRS reserves the right to go as far back as six years.

Tax penalties for disallowed business expense deductions

If you’re caught claiming a deduction you don’t qualify for, which helped you pay substantially less income tax than you should have, you’ll be penalized. In this case, “substantially less” means the equivalent of a difference of 10% of what you should have paid, or $5,000—whichever amount is higher.

The penalty is typically 20% of the difference between what you should have paid and what you actually paid in income tax. This is on top of making up the difference.

Ultimately, you’re paying back 120% of what you cheated off the IRS.

If you’re slightly confused at this point, don’t stress. Here’s an example to show you how this works:

Suppose you would normally pay $30,000 income tax. But because of a deduction you claimed, you only pay $29,000 income tax.

If the IRS determines that the deduction you claimed is illegitimate, you’ll have to pay the IRS $1200. That’s $1000 to make up the difference, and $200 for the penalty.

Form 8275 can help you avoid tax penalties

If you think a tax deduction may be challenged by the IRS, there’s a way you can file it while avoiding any chance of being penalized.

File Form 8275 along with your tax return. This form gives you the chance to highlight and explain the deduction in detail.

In the event you’re audited and the deduction you’ve listed on Form 8275 turns out to be illegitimate, you’ll still have to pay the difference to make up for what you should have paid in income tax—but you’ll be saved the 20% penalty.

Unfortunately, filing Form 8275 doesn’t reduce your chances of being audited.

Where to claim travel expenses

If you’re self-employed, you’ll claim travel expenses on Schedule C , which is part of Form 1040.

When it comes to taking advantage of the tax write-offs we’ve discussed in this article—or any tax write-offs, for that matter—the support of a professional bookkeeping team and a trusted CPA is essential.

Accurate financial statements will help you understand cash flow and track deductible expenses. And beyond filing your taxes, a CPA can spot deductions you may have overlooked, and represent you during a tax audit.

Learn more about how to find, hire, and work with an accountant . And when you’re ready to outsource your bookkeeping, try Bench .

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• Building Your Business
• Business Taxes

7 Rules You Should Know About Deducting Business Travel Expenses

• What Is Your "Tax Home"?

Charges on Your Hotel Bill

The 50% rule for meals, the cost of bringing a spouse, friend or employee.

• Using Per Diems To Calculate Employee Travel Costs

Combined Business/Personal Trips

International business travel.

• The Cost of a Cruise (Within Limits)

Frequently Asked Questions (FAQs)

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The IRS has a specific definition for business travel when it comes to determining whether these expenses are tax deductible. The agency says business travel is travel that takes you away from your tax home and is "substantially longer than an ordinary day's work." It requires that you sleep or rest while you're away from home, and that you do so. The travel must be "temporary." This means it can't last a year or more.

Key Takeaways

• You can deduct expenses that take you away from your tax home for a period of time that would require you to spend the night.
• Your tax home is the city or area where your regular place of business is located.
• You’re limited to 50% of the cost of your meals.
• Your trip must be entirely business-related for costs to be deductible, but special rules apply if you travel outside the U.S.

What Is Your "Tax Home"?

Your tax home is a concept set by the IRS to help determine whether a trip is tax deductible. It's defined by the IRS as the entire city or general area where your regular place of business is located. It's not necessarily the area where you live. 

Your tax home can be used to determine whether your business travel expenses are deductible after you've determined where it's located. You can probably count your expenses during travel as business deductions if you have to leave your tax home overnight or if you otherwise need time to rest and sleep while you're away.

Check with a tax professional to make sure you're accurately identifying the location of your tax home.

Charges for your room and associated tax are deductible, as are laundry expenses and charges for phone calls or for use of a fax machine. Tips are deductible as well. But additional personal charges, such as gym fees or fees for movies or games aren't deductible.

You can deduct the cost of meals while you're traveling, but entertainment expenses are no longer deductible and you can't deduct "lavish or extravagant" meals. 

Meal costs are deductible at 50%. The 50% limit also applies to taxes and tips. You can use either your actual costs or a standard meal allowance to take a meal cost deduction, as long as it doesn't exceed the 50% limit.

The cost of bringing a spouse, child, or anyone else along on a business trip is considered a personal expense and isn't deductible. But you may be able to deduct travel expenses for the individual if:

• The person is an employee
• They have a bona fide business purpose for traveling with you
• They would otherwise be allowed to deduct travel expenses

You may be able to deduct the cost of a companion's travel if you can prove that the other person is employed by the business and is performing substantial business-related tasks while on the trip. This may include taking minutes at meetings or meeting with business clients.

Using Per Diems To Calculate Employee Travel Costs 

The term "per diem" means "per day." Per diems are amounts that are considered reasonable for daily meals and miscellaneous expenses while traveling. 

Per diem rates are set for U.S. and overseas travel, and the rates differ depending on the area. They're higher in larger U.S. cities than for sections of the country outside larger metropolitan areas. Companies can set their own per diem rates, but most businesses use the rates set by the U.S. government.

Per diem reimbursements aren't taxable unless they're greater than the maximum rate set by the General Service Administration. The excess is taxable to the employee.

If you don't spend all your time on business activities during an international trip, you can only deduct the business portion of getting to and from the destination. You must allocate costs between business and personal activities.

Your trip must be entirely business-related for you to take deductions for travel costs if you remain in the U.S., but some "incidental" personal time is okay. It would be incidental to the main purpose of your trip if you travel to Dallas for business and you spend an evening with family in the area while you're there. 

But attempting to turn a personal trip into a business trip won't work unless the trip is substantially for business purposes. The IRS indicates that “the scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip."

The rules are different if part or all of your trip takes you outside the U.S. Your international travel may be considered business-related if you were outside the U.S. for more than a week and less than 25% of the time was spent on personal activities. 

You can deduct the costs of your entire trip if it takes you outside the U.S. and you spend the entire time on business activities, but you must have "substantial control" over the itinerary. An employee traveling with you wouldn't have control over the trip, but you would as the business owner would.

 The trip may be considered entirely for business if you spend less than 25% of the time on personal activities if your trip takes you outside the U.S. for more than a week.

You can only deduct the business portion of getting to and from the destination if you don't spend all your time on business activities during an international trip. You must allocate costs between your business and personal activities.

The Cost of a Cruise (Within Limits) 

The cost of a cruise may be deductible up to the specified limit determined by the IRS, which is $2,000 per year as of 2022.  You must be able to show that the cruise was directly related to a business event, such as a business meeting or board of directors meeting.

The IRS imposes specific additional strict requirements for deducting cruise travel as a business expense.

How do you write off business travel expenses?

Business travel expenses are entered on Schedule C if you're self-employed . The schedule is filed along with your Form 1040 tax return. It lists all your business income, then you can subtract the cost of your business travel and other business deductions you qualify for to arrive at your taxable income.

What are standard business travel expenses?

Standard business travel expenses include lodging, food, transportation costs , shipping of baggage and/or work items, laundry and dry cleaning, communication costs, and tips. But numerous rules apply so check with a tax professional before you claim them.

The Bottom Line

These tax deduction regulations are complicated, and there are many qualifications and exceptions. Consult with your tax and legal professionals before taking actions that could affect your business. 

IRS. " Topic No. 511: Business Travel Expenses ."

IRS. " Publication 463 (2021), Travel, Gift, and Car Expenses ."

IRS. " Here’s What Taxpayers Need To Know About Business-Related Travel Deductions ."

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What Are Travel Expenses?

Understanding travel expenses, the bottom line.

• Deductions & Credits
• Tax Deductions

Travel Expenses Definition and Tax Deductible Categories

Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively.

For tax purposes, travel expenses are costs associated with traveling to conduct business-related activities. Reasonable travel expenses can generally be deducted from taxable income by a company when its employees incur costs while traveling away from home specifically for business. That business can include conferences or meetings.

Key Takeaways

• Travel expenses are tax-deductible only if they were incurred to conduct business-related activities.
• Only ordinary and necessary travel expenses are deductible; expenses that are deemed unreasonable, lavish, or extravagant are not deductible.
• The IRS considers employees to be traveling if their business obligations require them to be away from their "tax home” substantially longer than an ordinary day's work.
• Examples of deductible travel expenses include airfare, lodging, transportation services, meals and tips, and the use of communications devices.

Travel expenses incurred while on an indefinite work assignment that lasts more than one year are not deductible for tax purposes.

The Internal Revenue Service (IRS) considers employees to be traveling if their business obligations require them to be away from their "tax home" (the area where their main place of business is located) for substantially longer than an ordinary workday, and they need to get sleep or rest to meet the demands of their work while away.

Well-organized records—such as receipts, canceled checks, and other documents that support a deduction—can help you get reimbursed by your employer and can help your employer prepare tax returns. Examples of travel expenses can include:

• Airfare and lodging for the express purpose of conducting business away from home
• Transportation services such as taxis, buses, or trains to the airport or to and around the travel destination
• The cost of meals and tips, dry cleaning service for clothes, and the cost of business calls during business travel
• The cost of computer rental and other communications devices while on the business trip

Travel expenses do not include regular commuting costs.

Individual wage earners can no longer deduct unreimbursed business expenses. That deduction was one of many eliminated by the Tax Cuts and Jobs Act of 2017.

While many travel expenses can be deducted by businesses, those that are deemed unreasonable, lavish, or extravagant, or expenditures for personal purposes, may be excluded.

Types of Travel Expenses

Types of travel expenses can include:

• Personal vehicle expenses
• Taxi or rideshare expenses
• Airfare, train fare, or ferry fees
• Laundry and dry cleaning
• Business meals
• Business calls
• Shipment costs for work-related materials
• Some equipment rentals, such as computers or trailers

The use of a personal vehicle in conjunction with a business trip, including actual mileage, tolls, and parking fees, can be included as a travel expense. The cost of using rental vehicles can also be counted as a travel expense, though only for the business-use portion of the trip. For instance, if in the course of a business trip, you visited a family member or acquaintance, the cost of driving from the hotel to visit them would not qualify for travel expense deductions .

The IRS allows other types of ordinary and necessary expenses to be treated as related to business travel for deduction purposes. Such expenses can include transport to and from a business meal, the hiring of a public stenographer, payment for computer rental fees related to the trip, and the shipment of luggage and display materials used for business presentations.

Travel expenses can also include operating and maintaining a house trailer as part of the business trip.

Can I Deduct My Business Travel Expenses?

Business travel expenses can no longer be deducted by individuals.

If you are self-employed or operate your own business, you can deduct those "ordinary and necessary" business expenses from your return.

If you work for a company and are reimbursed for the costs of your business travel , your employer will deduct those costs at tax time.

Do I Need Receipts for Travel Expenses?

Yes. Whether you're an employee claiming reimbursement from an employer or a business owner claiming a tax deduction, you need to prepare to prove your expenditures. Keep a running log of your expenses and file away the receipts as backup.

What Are Reasonable Travel Expenses?

Reasonable travel expenses, from the viewpoint of an employer or the IRS, would include transportation to and from the business destination, accommodation costs, and meal costs. Certainly, business supplies and equipment necessary to do the job away from home are reasonable. Taxis or Ubers taken during the business trip are reasonable.

Unreasonable is a judgment call. The boss or the IRS might well frown upon a bill for a hotel suite instead of a room, or a sports car rental instead of a sedan.

Individual taxpayers need no longer fret over recordkeeping for unreimbursed travel expenses. They're no longer tax deductible by individuals, at least until 2025 when the provisions in the latest tax reform package are due to expire or be extended.

If you are self-employed or own your own business, you should keep records of your business travel expenses so that you can deduct them properly.

Internal Revenue Service. " Topic No. 511, Business Travel Expenses ."

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 13.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Page 7.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Pages 6-7, 13-14.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 4.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Pages 5, 7.

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Tax Deductions for Business Travelers

When you are self-employed, you generally can deduct the ordinary and necessary expenses of traveling away from home for business from your income. But before you start listing travel deductions, make sure you understand what the Internal Revenue Service (IRS) means by "home," "business," and "ordinary and necessary expenses."

Ordinary vs. necessary expenses

Business home, not home sweet home, transportation expenses on a business trip are deductible, fees for getting around are deductible, lodging, meals and tips are deductible.

Key Takeaways

• Typically, you can deduct travel expenses if they are ordinary (common and accepted in your industry) and necessary (helpful and appropriate for your business).
• You can deduct business travel expenses when you are away from both your home and the location of your main place of business (tax home).
• Deductible expenses include transportation, baggage fees, car rentals, taxis and shuttles, lodging, tips, and fees.
• You can also deduct 50% of either the actual cost of meals or the standard meal allowance, which is based on the federal meals and incidental expense per diem rate.

The IRS defines expense ordinary and necessary expenses this way:

• An expense is ordinary if it is common and accepted in your industry
• An expense is necessary if it is helpful and appropriate for your business

You can claim business travel expenses when you're away from home but "home" doesn't always mean where your family lives. You also have a tax home—the city where your main place of business is located—which may not be the same as the location of your family home.

For example, if you live in Petaluma, California but your permanent work location is in San Jose where you stay in hotels and eat out during the work week, you typically can't deduct your expenses in San Jose or your transportation home on weekends.

• In this situation San Jose is your tax home , so no deductions are permitted for ordinary and necessary expenses there.
• Your trips to your home in Petaluma are not mandated by business.

Go by plane, train or bus—the actual cost of the ticket to ride is deductible, as well as any baggage fees. If you have to pay top dollar for a last-minute flight, the high-priced ticket is a business expense, but if you use frequent-flyer miles for a free ticket, the deduction is zero.

If you decide to rent a car to go on a business trip, the car rental is deductible. If you drive your own vehicle, you can usually take actual costs or the IRS standard mileage rate. For 2023 the rate is 65.5 cents per mile. You also can add tolls and parking costs onto your deduction. This amount increases to 67 cents per mile for 2024.

TurboTax Tip: Even if you use the federal meals and incidental expense per diem rates to calculate your deductions, be sure to keep receipts from all your meals and incidental expenses.

Fares for taxis or shuttles can be deducted as business travel expenses. For example, you can deduct the fare or other costs to go to:

• Airport or train station
• Hotel from the airport or train station
• Between your hotel and the work location
• Between clients in the area

If you rent a car when you arrive at your destination, the expense is deductible as long as the car is used exclusively for business. If you use it both for business and personal purposes, you can only deduct the portion of the rental used for business.

The IRS allows business travelers to deduct business-related meals and hotel costs, as long as they are reasonable considering the circumstances—not lavish or extravagant.

You would have to eat if you were home, so this might explain why the IRS limits meal deductions to 50% of either the:

• Actual cost of the meal
• Standard meal allowance

This allowance is based on the federal meals and incidental expense per diem rate that depends on where and when you travel.

Generally, you can deduct 50% of the cost of meals. Alternatively, if you do not incur any meal expenses nor claim the standard meal allowance, you can deduct the amount of $5 per day for incidental expenses. You can also deduct incidental expenses, such as:

• Fees and tips given to hotel staff
• Fees for porters and baggage carriers

But don't forget to keep track of the actual costs.

Let a local tax expert matched to your unique situation get your taxes done 100% right with TurboTax Live Full Service . Your expert will uncover industry-specific deductions for more tax breaks and file your taxes for you. Backed by our Full Service Guarantee . You can also file taxes on your own with TurboTax Premium . We’ll search over 500 deductions and credits so you don’t miss a thing.

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The rules on travel and subsistence: a long and winding road

Employment tax.

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As our working patterns shift and more of us move to hybrid working, what impact will this have on claiming tax relief for travel and subsistence expenses?

What is the issue?

While travel and subsistence is an area of compliance that seems straightforward on the face of it, it can actually be extremely complex for employers to understand and get right.

What does it mean for me?

Key considerations include rules concerning permanent and temporary workplaces, ordinary commuting and working from home. Make sure your policies are clear on what travel and subsistence expenses employees can claim.

What can I take away?

With the move to widespread hybrid working, we expect to see HMRC increasing its focus on these types of travel and subsistence expenses.

The coronavirus pandemic has significantly changed the way we work. Homeworking has become the norm for many more employees who previously spent all or almost all of their time in offices. Millions of us are now working from home for two or three days each week and spending the rest of the working week in the office. Homeworking and hybrid working appear to be here to stay.

That all sounds familiar and straightforward but the nub of the problem is that, for travel and subsistence expenses, even though more employees work remotely and/or are much more mobile than they used to be, the current tax rules covering employee travel and subsistence have not changed substantively since April 1998.

It was widely hoped back in 2016, when the last review of the travel and subsistence rules took place, that some of the shortcomings in the rules might be addressed. But the fact they were not should come as no real surprise, as the 1998 amendment itself aimed to change rules that had dated back some 140 years.

While travel and subsistence is an area of compliance that seems straightforward on the face of it, it can actually be extremely complex for employers to understand and get right. It is no coincidence that HMRC has issued a guidance booklet with over 70 pages to help explain the rules, and that it focuses on travel and subsistence during its reviews of employer records. 

In the past, HMRC has undertaken detailed reviews of situations where employees have a workplace at home but also another elsewhere (such as their employer’s headquarters) and the employer meets the cost of journeys between their home and the other workplace; or where the employer is paying travel and subsistence expenses for what they believe is a move covered under the ‘detached duty’ rules allowing for the amounts to be paid tax free. With the move to widespread hybrid working, we expect to see HMRC increasing its focus on these types of travel and subsistence expenses.

Within the current system, there are two main things to bear in mind relating to travel and subsistence.

The first (under the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 s 337) is that tax relief is provided for ‘travel in the performance of the duties of the employment’. In other words, relief is given for travel that is an intrinsic part of an employee’s job and may include journeys between two workplaces. This rule is generally well understood by employers and often applied correctly in practice, but this could change going forward as more employees work from home and employers incorrectly conclude that their employees’ homes are workplaces for tax purposes.

However, it is in relation to the second rule (under ITEPA 2003 s 338) – which provides tax relief for necessary journeys to workplaces that employees must attend for work purposes, apart from those amounting to ‘ordinary commuting’ – that problems most often arise.

Key terms and considerations

The key terms and considerations needed to understand the rules are summarised below. Note that the rules for subsistence are similar to those for travel. If a business journey is allowable for tax purposes, the subsistence cost attributable to that journey generally is also allowable, unless there are issues around excessive expenditure, dual-purpose trips, and round sum or benchmark allowances.

Travel and subsistence expenses which attract tax relief and satisfy the exemption for paid or reimbursed expenses (ITEPA 2003 s 289A) do not need to be reported to HMRC.

Any travel expenses paid by the employer which do not attract tax relief, and which are not exempted by ITEPA 2003 s 289A, will (depending on the circumstances and subject to a PAYE Settlement Agreement being in place to cover such costs) either need to be:

• reported and dealt with at the tax year-end on forms P11D and P11D(b);
• reported and subjected to tax and Class 1 National Insurance Contributions (NIC) under PAYE at the time of payment; or
• reported and dealt with at the tax year-end on forms P11D for tax purposes and subjected to Class 1 NIC under PAYE at the time of payment.

HMRC penalties for non-compliance can be costly. For example, if incorrect P11Ds are filed negligently, a penalty of up to £3,000 per form can be levied by HMRC (although normally only in the most serious cases).

It could also mean that employers are liable for any tax and NIC that has been underpaid, potentially on a grossed-up basis, plus late payment interest. This can get expensive and large settlements have been seen on HMRC compliance reviews covering travel and subsistence expenses, particularly for large businesses. Settlements are often in relation to homeworkers having another permanent workplace and being paid for their travel expenses between their homes and those permanent workplaces; and travel from home to places which are not considered to be a temporary workplace.

1. Permanent workplace

A ‘permanent workplace’ is considered to be somewhere that an employee works regularly to perform their duties of employment. In many instances, it can be clear whether or not somewhere is an employee’s permanent workplace and, therefore, whether a journey to it can be deemed ordinary commuting. It is also possible for an employee to have more than one permanent workplace at the same time.

Travel to or from a permanent workplace and an employee’s home is generally treated as private rather than business travel, and so tax relief is not due on any related costs that are paid or reimbursed by an individual’s employer.

Necessary travel which takes place between one permanent workplace and another while an employee performs their duties of employment during the working day is treated as business travel and attracts tax relief.

2. Temporary workplace

A ‘temporary workplace’ is somewhere the employee attends to perform a task of limited duration or for a temporary purpose. So even if they attend it regularly, it may still not be classed as a permanent workplace.

There is, however, a special rule which treats a workplace that would otherwise be a temporary workplace as a permanent workplace, where an employee spends or is likely to spend more than 40% of their working time at that workplace over a period that lasts or is likely to last more than 24 months (known as the ‘24 month/40% rule’).  

Bear in mind that the 24 month/40% rule treats locations that would otherwise be ‘temporary workplaces’ as ‘permanent workplaces’. If the workplace is not temporary in the first place (as it does not meet the definition laid out in the Employment Income Manual at EIM32075), the workplace would already be treated as a permanent workplace.

Travel to or from a temporary workplace and an employee’s home is generally treated as business rather than private travel; and so tax relief is due on any related costs that are paid or reimbursed by an individual’s employer, unless it is substantially the same journey in which case no deduction is allowable (ITEPA 2003 s 338(2)). This is not often considered by employers and very few expenses policies ever have this covered.

Such distinctions can be confusing – and as highlighted above, this is one of the areas of travel and subsistence on which HMRC focuses its attention. Employers often fail to consider the task involved or the purpose for working at a given location, which is what the legislation requires.

The employee’s attendance is not in question; the issue is whether the task itself will be undertaken for a limited duration or whether it is performed for a temporary purpose. The trouble is that many employers fail to look too deeply at the matter and simply consider the ‘24 month/40%’ rule, without first considering whether the workplace is capable of being a temporary workplace.

HMRC may ask for contracts, diaries and job descriptions in order to determine whether the locations visited meet the definition of a ‘temporary workplace’. Covid-19 has also presented a particular issue in that HMRC’s view is that the clock remained ticking even when government gave instructions to work from home where possible, so many employers are likely to find the 24 month period has expired during the last few years while employees have been working from their homes.

It should also be remembered that the word ‘task’ is not defined in the legislation. As a result, the normal dictionary definition applies. Here a ‘task’ is something specific; for example, a piece of work, rather than a group of things to do, which is the nature of a job more generally.

3. Ordinary commuting

For most employees, ‘ordinary commuting’ is the journey they make most days between their home and permanent workplace. Travel and subsistence expenses would normally be taxable here if the costs of ordinary commuting were paid for or reimbursed by their employer, or if travel facilities were provided.

But for some staff, the situation is more complicated. For example, if the journey to a temporary location is broadly the same as an employee’s ordinary commute to their permanent workplace, tax relief would be denied on the basis that the journey is normally treated as private travel.

This rule applies generally if the journey is in the same direction or on the same route, and amounts to less than 10 miles extra each way than the normal commute. This area is rarely explained in most employers’ travel and expenses policies but is again something that HMRC is increasingly focusing its energy on, particularly in major towns and cities.

4. Working from home

A key consideration when moving to a homeworking arrangement is whether the employer will meet the cost of the employee’s travel between their home and the office when they do travel into the office. This is of particular relevance to hybrid working arrangements.

The tax and NIC treatment of employees’ travel expenses can be complex and is particularly difficult to apply practically to modern working practices, such as hybrid working.

HMRC recently updated its guidance covering employees who work from home (EIM01471) to cover hybrid working. It now includes ‘Travel in the performance of the duties: travel to and from home where it is a place of work’ at EIM32370. The clear challenge with hybrid working is that when employees do travel into the office, often the statutory conditions in ITEPA 2003 s 337 will not be met for home to be a workplace for tax purposes, and under ITEPA 2003 s 338 the office will remain a permanent workplace.

Employers must therefore be clear when agreeing hybrid or homeworking arrangements which travel and subsistence expenses can be paid tax and NIC free and which cannot. EIM32174 covers ‘Travel for necessary attendance: employees who work at home: a hybrid working: example’.

In rare cases, ITEPA 2003 s 337 may apply, allowing for tax relief between the home (as a workplace) and another permanent workplace, as covered in EIM32370. The problem with applying ITEPA 2003 s 337 to hybrid working is that in many cases the location of the home isn’t dictated by the requirements of the job. HMRC notes: ‘For most people, the place where they live is a matter of personal choice. So the expense of travelling from home to any other place is a consequence of that personal choice, not an objective requirement of their job.’ The relief in ITEPA 2003 s 337 is therefore unlikely to apply to the majority of homeworking and hybrid working arrangements. It is worth noting that HMRC’s guidance says:

‘Most employers provide all the facilities necessary for work to be carried out at their business premises. So where employees work at home, they usually do so because it is convenient rather than because the nature of the job actually requires them to carry out the duties of their employment there. However, where it is an objective requirement of an employee’s duties to carry out substantive duties at the home address, then his or her home is a workplace for tax purposes.’

ITEPA 2003 s 338 then needs to be considered. This allows tax relief for travel expenses for the necessary attendance at any place in the performance of the duties of employment. To determine whether tax relief is due under s 338 for journeys between an employee’s home and their employer’s business premises, we need to consider whether the employee is travelling to a permanent or temporary workplace (see definitions above).

HMRC often quotes the case of Kirkwood v Evans [2002] EWHC 30 when looking at a ‘working from home’ situation. It concluded that although Mr Evans went to the Leeds office for only one day a week, it was a permanent and continuing part of his duties to do so. The judgment dealt with the situation briefly in a single paragraph, also stating that Mr Evans had conceded that the Leeds office was not his temporary workplace, even though the General Commissioners had concluded it was. The judge justified this view by saying: ‘This attendance was both regular and was not for the purpose of performing a task of limited duration or for some other temporary purpose.’

Perhaps Mr Evans was ill-advised to admit that Leeds was a permanent workplace. It could be argued that he undertook certain specific tasks each time he went there that were of limited duration; namely, delivering work he had performed since his last visit, taking new work with him, and downloading information from a database. On the other hand, HMRC seemed to argue that the word ‘task’ refers to doing these things each week on a continual basis.

There are, of course, also other special rules to consider on top of the above that cover areas relating to international trips, area-based and depot-based employees together with emergency call-outs.

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What is a Tax Home, and How Does it Impact Travel Expenses?

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Written by Liz Farr, CPA

• Modified Aug 8, 2019

Today’s super-mobile workforce means that you may have clients who are splitting their time between multiple work locations. In these situations, understanding the concept of a tax home will help clarify the treatment of travel expenses.

What is a Tax Home?

The IRS defines a tax home as the city or general area where someone’s main place of business or work is located. If your client travels away from their tax home for work purposes, their travel expenses may be deductible.

“May be deductible” has taken on new meaning since the  Tax Cuts and Jobs Act  was passed in late 2017. Under prior law, employees could deduct unreimbursed work expenses, including travel expenses, as a miscellaneous itemized deduction. However, from 2018 though 2025, that deduction has been suspended, except for Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials.

The best bet for employees who no longer qualify to deduct their travel expenses is to set up an  accountable plan  with their employer. Reimbursed travel expenses under an accountable plan are not taxable to the employee, while reimbursements under a non-accountable plan are included in the employee’s wages.

However, self-employed individuals can still deduct expenses for travel away from their tax home as business expenses.

A tax home may or may not be the same place as the family home, or a place that your client returns to regularly. For clients who work in more than one place, their tax home is their main place of business or work. This is determined by considering the following factors:

• The total time spent in each place.
• The level of business or work activity in each place.
• The relative amount of income earned in each place.

Expenses for work-related travel away from someone’s tax home are deductible or can be reimbursed tax-free under an accountable plan. Travel expenses include transportation, meals, lodging, laundry and dry cleaning, and incidentals.

For example, Ryan is a self-employed consultant living in Denver. He spends one week of every month working onsite for a client in Salt Lake City. Ryan spends the remaining three weeks of the month working with clients in the Denver area. Ryan’s tax home is Denver, so his travel, lodging and meal expenses for his monthly trips to Salt Lake City are deductible.

Over time, Ryan’s client in Salt Lake City becomes a bigger part of his work. Eventually, Ryan is spending all of his working time in Salt Lake City and flying home to Denver on the weekends. Now, his tax home is Salt Lake City, and neither his living expenses in Salt Lake City nor his plane fare between Denver and Salt Lake City are deductible.

What About Temporary Work Assignments?

It’s not unusual for an employee to be sent to work in a different location. If that assignment is temporary and the employee maintains a home in the original location, the tax home is still the original location. Travel expenses will be deductible for a contractor. Employee reimbursements under an accountable plan will be tax-free.

But, if the assignment is permanent or indefinite, then the person’s tax home is the new location, so travel expenses are not deductible. Accountable plan reimbursements are now taxable to the employee.

The IRS defines “temporary” as a work assignment that’s expected to last a year or less. If a work assignment that started out as a temporary posting is extended to more than a year, then it becomes an indefinite assignment when the anticipated duration changes.

For example, Kimberly has been working for a company in Boston and is sent to Los Angeles for an eight-month project. Kimberly’s tax home is still Boston. Her employer reimburses her for her travel, lodging and meals under an accountable plan, and those reimbursements are tax-free.

However, seven months into the project, Kimberly’s employer decides to extend her posting in Los Angeles for another eight months, to a total of 15 months. At that point, Kimberly’s assignment becomes indefinite, so her tax home changes to Los Angeles. If her employer continues to reimburse her for living expenses, even if it’s done under an accountable plan, those reimbursements are now taxable.

This only scratches the surface of the tangled web that results when people live and work in multiple locations. Depending on the states involved, your clients may also have state tax issues. IRS  Publication 463 ,  Travel, Gift, and Car Expenses , is a good resource, so be sure to check it out if you have clients in this situation.

Editor’s note: This article was published on the Firm of the Future blog .

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Liz spent 15 years working as an accountant with a focus on tax work as well as working on audits, business valuation, and litigation support. Since 2018, she’s been a full-time freelance writer, and has written blog posts, case studies, white papers, web content, and books for accountants and bookkeepers around the world. Her current specialty is ghostwriting for thought leaders in accounting. More from Liz Farr, CPA

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When remote workers live far away, who pays for their office visits?

Employers need to consider what’s legal, cost-effective and fair when approving expenses for office travel for remote workers

Reader: I recently became the boss of a small business. During the coronavirus pandemic, some of our remote-working employees decided to move out of town without asking for or receiving employer approval. Who is responsible for their expenses when they come back to town for a meeting or conference — the employer or the employee?

The remote workers who have moved out of town seem to think the employer should pay for their transportation, hotels and meals when they come back to town for work. Besides being an added expense for a small business, it also seems unfair to local employees, since we don’t cover their commuting costs when they come to the office. Any thoughts on this?

The remote work revolution already is reshaping America

Karla: As the dust settles from the Great Resignation / Great Resettlement / Great Whatever-we’re-calling-it-now, remote work has enabled more workers than ever to move out of their offices — and in some cases, far away from them. Some seek more affordable and spacious housing, or to be closer to family or live in an area that suits their overall well-being.

But employees who abruptly and unilaterally change the terms of their working conditions, under the theory that it’s easier to ask forgiveness than permission, have to understand that they’re still at risk of hearing “No.” With a worker-favorable job market and employers desperate to retain talent, many workers have decided they’re willing to take that risk.

This employee-driven exodus has forced many employers to rethink their business model and how they manage their dispersed workforces. Some, including Meta/Facebook, Novartis, Dropbox and Slack, are embracing a remote-first , “work from anywhere” model for many or all employees. Others, including Apple, Amazon, Microsoft and Tesla, are choosing to limit or prohibit remote work. Between those extremes are employers like you, looking for a hybrid solution that’s legal, cost-effective and fair to both out-of-town and local workers.

First, there’s the question of what’s legal. As you note, regular commuting costs between home and work are not usually covered by employers, and that commute time is not generally considered work time. But when a worker’s home becomes their primary workplace, it can change how the law views travel between that primary workplace and other employer-owned sites.

Federal law doesn’t require employers to reimburse employees for any expense unless it reduces their pay below minimum wage. But California and other states do require reimbursement for some work-related expenses including travel. So you should start by determining whether you are legally required to cover the cost of transporting employees to your office, or have the option to refuse to do so.

Then there’s the question of cost. Covering travel costs would be an added expense. Allowing remote workers’ homes to become their primary workplaces, especially if they’ve moved to another state or country, can also mean additional tax exposure and other new expenses. But refusing to allow these changes can also cost you if those workers quit and you need to replace them.

If you decide paying for travel is the better investment, you can control those costs with a clear, consistent expense policy; limiting the frequency of required office visits; and revising your compensation structure to account for variable cost of living in different geographical areas, including pay cuts or leveling off future raises and bonuses for workers in lower-cost areas. You may even be able to lessen the financial blow if the new expenses you’re paying are tax-deductible. In any case, you should be talking to tax, legal and benefits experts to determine the most cost-effective options.

Finally, there’s the question of what’s fair. As you say, it doesn’t quite sit right that employees who made a unilateral decision to move out of commuting range should travel, sleep and eat on the company’s dime when local employees bear those costs themselves. And don’t kid yourself that the local employees won’t notice or care about that disparity.

Lawsuit alleges Booz Allen employee lost job over remote work for migraines

But as with any personal lifestyle choice that can result in workplace friction — workers with kids vs. those without, early birds vs. night owls — there are ways to balance the plates. If you’re not already doing so, you can offer local employees transit and parking perks; provide group meals at the office; and, of course, allow local workers the same kind of flexibility and autonomy over their work hours that their out-of-town colleagues enjoy. And you should design a policy laying out how your company will handle remote-work and relocation requests in the future.

There’s no guaranteed solution to make everyone happy, but if you are deliberate, consistent and transparent in your response to these changes, your company can come out stronger for it.

Reader query: Is your employer requiring employees to live within commuting distance of an office? Let me know at [email protected] .

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Remote work and telework FAQs

These FAQs clarify many of the questions that have been raised by agencies regarding travel and relocation regulations and how they apply to employees who telework, or are remote workers, and who relocate. These FAQs are not necessarily a complete list; if you have questions you think would be helpful for all Federal employees to know, please submit them to [email protected] .

Where can I find information about telework and remote work and how travel and relocation entitlements apply?

Where can i find the ftr.

The FTR is found within Title 41 of the Code of Federal Regulations (CFR), Chapters 300-304, and is available online at https://ecfr.federalregister.gov/current/title-41/subtitle-F .

Where can I find important terms relating to telework and remote work and their definitions?

Who has the authority to determine whether, and under what circumstances, employees may be reimbursed for local travel expenses.

Reimbursement of expenses within the boundary of the employee’s official station or invitational traveler’s home/residence is at the discretion of the agency. Agencies have the authority to establish the local travel area, as long as no part of the area exceeds 50 miles from where the employee regularly performs his or her duties. The FTR does not address local travel, as the Administrator of General Services’ authority to issue regulations under the FTR relates to TDY travel away from the official duty station (5 U.S.C. § 5707) and relocation (5 U.S.C. § 5738).

When a remote worker is required to report to the agency worksite, is the employee entitled to reimbursement of travel and transportation expenses?

It depends.

• If the agency worksite is within the boundary of the employee’s official worksite, the employee’s agency local travel policy will determine what expenses may be reimbursed. 
• If the agency worksite is more than 50 miles from the employee’s official worksite (or otherwise exceeds the boundary of the official station set by agency policy), the employee is entitled to reimbursement of actual and necessary expenses to perform the official business.

Must agencies pay the travel expenses of a remote worker each time they report to the agency worksite if the agency worksite is outside the boundary of the official station of the remote employee?

Yes, unless exempted by statute (e.g., 5 U.S.C. § 5711). Agencies without an exemption must pay TDY expenses for a remote worker to report to the agency worksite (in this case, the TDY location) if the agency worksite is outside the boundary of the remote employee’s official station (e.g., more than 50 miles away from the employee’s home). Agencies should review multiple factors involved in remote work requests, such as how often and for what purposes it will require the employee to work at the agency worksite, and carefully consider whether to approve remote work arrangements to help manage costs.

Can an agency require an employee to sign a waiver to not accept travel or relocation reimbursement costs?

No. Statute provides that the Government shall pay actual and necessary travel and mandatory relocation costs (5 U.S.C. §§ 5702, 5724, 5724a). Accordingly, agencies cannot require employees to waive travel and mandatory relocation costs. If an agency authorizes TDY or a relocation (temporary or permanent change of station), that agency is required to pay all entitlements associated with those activities.

If an employee requests to become a remote worker, must the agency pay relocation expenses for their initial move?

Generally, no. If an employee elects to move outside the area of the agency worksite to become a remote worker (and the agency approves), the agency will likely not have to pay relocation expenses for the initial move because the transfer is voluntary and not “in the interest of the Government” (5 U.S.C. § 5724).

Must the agency pay relocation costs for a remote worker that voluntarily relocated if it later wants to relocate the employee back to the agency worksite?

Agencies should make voluntary relocation decisions carefully, because if the agency later directs the same employee to relocate to the agency worksite, the transfer is likely to be characterized as “in the interest of the Government” (5 U.S.C. § 5724). However, if the employee is no longer eligible for telework due to the limitations in 5 U.S.C. § 6502(a)(2), such as using agency equipment to view illicit content or not performing at the agency’s defined “fully successful” level (see 2021 Guide [PDF], pgs. 65-66), the agency will not have to pay relocation costs.

How can we ensure that remote workers do not get reimbursed more than teleworking employees who live the same distance away?

Assuming that a remote employee’s local travel area is 50 miles from their residence/official duty station, a remote employee who lives more than 50 miles from the agency worksite must be reimbursed for their travel costs to the agency worksite. However, GSA does not have authority to ensure that the non-remote employee receives a commensurate reimbursement. Agencies determine reimbursement policies that work best for their agency. 

For example, if two employees live in the same neighborhood, both 55 miles from the office, and one employee is a remote employee while the other is a teleworker, the remote employee will be reimbursed for travel expenses when they come to the agency worksite, but the other employee won’t. However, the teleworker could receive a transit subsidy benefit, assuming they meet agency guidelines. 

If an agency approves an employee that is not a remote worker for situational telework in a location outside the agency worksite, and the employee is assigned to perform TDY travel, must the employee depart from/return to the agency worksite (assuming the agency worksite is also their permanent duty station)?

Normally, an employee begins and ends TDY travel from their official station/permanent duty station. If they depart from or return to another location for personal convenience, that is considered an “indirect route” (see FTR §§ 301-10.7, 301-10.8) and any extra costs are borne by the traveler. However, if an agency approving official authorizes the alternate route as officially necessary, additional costs for the alternate route will be borne by the agency and not the employee. 

If a telework employee is required to come to the agency worksite on a day that is not their routine telework day, is the employee entitled to reimbursement of travel or transportation expenses?

A telework employee is not entitled to reimbursement for commuting costs or TDY travel reimbursement for commuting to the official worksite. Commuting is considered personal time, not official Government business. Therefore, employees are not entitled to compensation for their time or transportation costs incurred while commuting. 

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Traveler reimbursement is based on the location of the work activities and not the accommodations, unless lodging is not available at the work activity, then the agency may authorize the rate where lodging is obtained.

Unless otherwise specified, the per diem locality is defined as "all locations within, or entirely surrounded by, the corporate limits of the key city, including independent entities located within those boundaries."

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• Business tax

Ordinary commuting and private travel (490: Chapter 3)

What qualifies as ordinary commuting and private travel for tax purposes.

An employee cannot have tax relief for the cost of a journey which is ordinary commuting or private travel. The following paragraphs explain what these terms mean.

Ordinary commuting

The term ‘ordinary commuting’ means any travel between a permanent workplace and:

• any other place which is not a workplace

A workplace is a place where the employee’s attendance is necessary for the performance of the duties of that employment. The meaning of permanent workplace is explained at paragraph 3.10.

For most employees this means that ordinary commuting is the journey they make most days between their home and their normal place of work. However, for some employees the position is more complicated.

In general, there is no tax relief for the cost of travel between an employee’s permanent workplace and:

• any other place they visit for non-work reasons
• any place where they perform the duties of another job

Example 1 — ordinary commuting

James works 5 days a week at an office in central Birmingham which is his permanent workplace. From Monday to Thursday he travels to Birmingham from his home.

This journey is ordinary commuting. However, on a Thursday he always goes out for the evening with friends and often stays at a friend’s house overnight from where he travels directly into work in the morning.

His journey from his friend’s house to his permanent workplace is also ordinary commuting as it’s travel to a permanent workplace from a place which is not a workplace.

Example 2 — ordinary commuting

Dermot’s employer sometimes needs him to attend his permanent workplace outside normal working hours – for example, at the weekend. This means he incurs extra costs on bus fares, the cost of meals eaten at his desk and sometimes even the cost of overnight accommodation near his workplace.

No tax relief is available for any of this expenditure because all journeys between home and his permanent workplace are ordinary commuting. It makes no difference that Dermot’s employer needs him to make the journeys or that they’re made outside his normal working hours.

An employee cannot turn an ordinary commuting journey into a business journey by arranging a business appointment somewhere on the way just to get tax relief. They must be able to show that it was necessary to attend their destination to perform the duties of their employment. The journey must not simply be for the employee’s personal convenience.

Similarly, an employer cannot turn an ordinary commuting journey into a business journey by asking an employee to stop off on the way to carry out business tasks such as making phone calls.

For more information, read:

• paragraph 2.6 of whether or not travel qualifies for tax relief (Chapter 2)
• paragraphs 4.3 to 4.5 of safeguards against abuse (Chapter 4)

Where someone other than the employee pays or provides for their ordinary commuting (by reimbursing the costs, by paying directly for the travel or by providing travel facilities) and this arises from or by reason of the employment, the payment or provision is taxable.

Reimbursements must be included as gross pay for PAYE purposes. All such payments and benefits should be reported on form P11D or a Full Payment Submission ( FPS ) if the employer is registered to payroll benefits. The tax charge arises irrespective of whether the payment or provision is made by the employer or by a third party.

There is an exemption for certain specific benefits provided through a travel plan. A travel plan is a package of practical measures designed to reduce car use for journeys to and from work, and for business travel. Travel plans are put together by employers, and can be adapted to suit the particular needs of individual sites.

Examples of what could be included in a travel plan include:

• a works bus provided by an employer that is available to all employees generally to transport them to and from work
• cycles or cycling safety equipment

Example 3 — ordinary commuting

To encourage staff to move to a new site at an out of town industrial development, an employer lays on a free bus service for his employees. Because the bus service is available to all employees generally to transport them to and from work there will be no tax charge.

Private travel

No tax relief is available for journeys which are private travel. Private travel is a journey between:

• an employee’s home and any other place they do not have to be for work purposes
• any 2 places an employee does not have to be for work purposes

Example 4 — private travel

Guy is an administrator. He has a permanent workplace in Derby. At certain times of the year he has work to do over the weekend. Generally, he takes it with him to his holiday cottage in Cornwall where he goes with his family most weekends.

Working in Cornwall does not make his holiday cottage a temporary workplace. His journey there is private travel and he is not entitled to tax relief for any cost.

No tax relief is available for travel that is made for private rather than for work purposes, even if that travel is to or from a workplace which, in other circumstances, would be a temporary workplace.

Example 5 — private travel

As part of her duties as a supervisor for a chain of supermarkets, Hannah has to visit different outlets. She gets tax relief for her travel. However, in addition Hannah is usually invited to the Christmas parties held at these outlets. She cannot get tax relief for this travel because it’s not for work purposes.

Permanent workplace

It is usually clear whether or not a place is an employee’s permanent workplace (and, therefore, whether a journey to or from that place is ordinary commuting).

A place is a permanent workplace if the employee attends it regularly for the performance of the duties of the employment and it’s not a temporary workplace.

A temporary workplace is somewhere the employee goes only to perform a task of limited duration or for a temporary purpose.

Paragraph 3.11 explains ‘attends regularly’. Paragraphs 3.13 to 3.28 explain ‘temporary workplace’, ‘limited duration’ and ‘temporary purpose’.

Regular attendance at a workplace

An employee attends a workplace regularly if their attendance:

• is frequent
• follows a pattern
• is for all or almost all of the period for which they hold or are likely to hold that employment

It’s reasonable to class anything done repeatedly, with some sort of consistency, that is, frequent or habitual, or follows a pattern, as ‘regular’ attendance. This means that fortnightly travel, for example, is capable of being regarded as ‘regular’. However, it’s possible that the attendance might be for a temporary purpose. The longer the interval between each visit, the higher the possibility that the purpose of the visit is a temporary one, therefore each set of circumstances will need to be considered on its own merits.

It’s possible for an employee to have 2 or more permanent workplaces. The employee will not be entitled to tax relief for the costs incurred in travelling from home to any of the permanent workplaces (read paragraph 3.43).

Non-executive directors

We regard non-executive directors as office holders, which means that the same rules relating to travel expenses apply to them as to employees generally.

In determining whether tax relief is available for the costs of a particular journey, consideration must be given to whether the workplace being travelled to is a temporary or permanent workplace.

Example 6 — non-executive directors

Dinesh is a non-executive director for a large banking group. The main duty of his role is to attend monthly board meetings which he travels to directly from his home.

The board meetings are all held at the banking groups headquarters in London. As all or almost all of the time that Dinesh spends working for that employer is spent at a single workplace it’s a permanent workplace and no relief for his travel expenses is due.

Temporary workplace — attendance for a limited duration or temporary purpose

A place is a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose even where the employee attends it regularly.

Task of limited duration

Where an employee attends a workplace for a limited period of time to do a particular task or project then the workplace will be a temporary workplace, even where the employee’s attendance is regular.

This is on the basis that they’re attending for the purpose of performing a task of limited duration. Read paragraph 3.18 and the 24-month rule.

Attendance for a temporary purpose

An employee may attend a workplace regularly and perform duties there which are not of limited duration without that workplace becoming a permanent workplace provided the purpose of each visit is for a temporary purpose. Read paragraph 3.41.

Where a visit is self-contained (that is, arranged for a particular reason rather than as part of a series of visits to the same workplace for the continuation of a particular task) it is likely to be for a temporary purpose.

Example 7 — attendance for a temporary purpose

Fred is a safety officer at his employer’s Nottingham office. He visits the employer’s Derby factory every week to carry out a particular safety check. His responsibility for that factory has been a duty of his employment for a period already spanning 20 years, so it’s not of limited duration.

However, the tasks he performs on each visit are self-contained and the purpose of each visit, considered alone, is temporary. Fred is entitled to tax relief for the full cost of his travel.

Example 8 — attendance for a temporary purpose

Gail is the finance director of a large company based in Scunthorpe. Once a fortnight her duties take her to the company’s production unit in the South East. Her visits are to consider individual investment proposals but she takes the opportunity to discuss local welfare issues as a representative of senior management.

The purpose of the visits is not linked, each one is self-contained. So the production unit is not Gail’s permanent workplace and she is entitled to tax relief for the full cost of her business travel.

Example 9 — attendance for a temporary purpose

Peter lives in Wolverhampton and has a permanent workplace in Birmingham. He is a director of a company which has a number of regional offices.

He has to attend a directors’ meeting each Friday in Stafford. Although the directors’ meetings are regularly held in the same place, Stafford does not become a permanent workplace for Peter because each visit is for a temporary purpose. So he is entitled to tax relief for the cost of his travel from home to Stafford.

Example 10 — attendance for a temporary purpose

Gemma is employed as a school teacher in Oswestry which is a permanent workplace. Every fortnight she goes to an education authority meeting in Bridgnorth. She is entitled to tax relief for her travel from home to Bridgnorth because while she goes there regularly each visit is for a temporary purpose.

Where a second workplace is attended for a meeting and other duties are also carried out there for the sake of efficiency, the duration of time spent at the second workplace should not be considered in isolation.

If a meeting is for a temporary purpose and normal duties are performed either side of the meeting to maximise the employee’s use of time, it does not make the second workplace a permanent one. Provided the employee is genuinely attending the second workplace for a temporary purpose and would not normally have been there otherwise, it follows that the second workplace would likely to be a temporary workplace.

Workplaces which are prevented from being temporary workplaces

There are a number of circumstances where, even though the employee attends a workplace to perform a task of limited duration or for some other temporary purpose, it will still be a permanent workplace. This will be the case where the 24 month or fixed term appointment rules apply or where the workplace is a depot or base.

Also, where the workplace is defined by reference to an area, we may treat that area as a permanent workplace. These rules are explained in paragraphs 3.18 to 3.35.

The 24-month rule

The 24 month rule prevents a workplace being a temporary workplace where an employee attends it in the course of a period of continuous work which lasts, or is likely to last, more than 24 months.

A period of continuous work is a period of work throughout which the duties of the employment are performed to a significant extent at that place. For the purposes of operating this rule, we regard duties as performed to a significant extent at any workplace if an employee spends 40% or more of their working time at that place.

The 24 month rule will also apply where an employee’s duties are defined by reference to a particular geographical area. Read paragraph 3.32.

This means that where the employee has spent, or is likely to spend, 40% or more of their working time at that particular workplace over a period of more than 24 months, it will be a permanent workplace.

Example 11 — the 24-month rule

Chris has worked for 5 years at her employer’s head office in Warrington. She is sent by her employer to perform duties at a branch office in Wigan for 18 months, after which she expects to return to work in Warrington.

As Chris’ attendance at the temporary workplace in Wigan is expected to last less than 24 months, tax relief is available for the full cost of her travel between home and the temporary workplace.

Example 12 — the 24-month rule

Duncan has worked for his employer in Sheffield for 10 years and is sent to help out at the employer’s Rotherham branch for 28 months.

There is no tax relief for the cost of travel to and from the workplace. This is because he will be spending more than 40% of his working time there and his attendance is known from the outset to be for more than 24 months so the workplace is a permanent workplace.

His home to work travel is therefore ordinary commuting for which no relief is available.

The test is whether the employee has spent, or is likely to spend more than 40% of their working time at a particular workplace over a period that lasts or is likely to last more than 24 months.

Where it’s expected that the employee will attend a workplace to perform a task of limited duration or for some other temporary purpose for a period of less than 24 months, the workplace will be a temporary workplace from the outset.

However, if at a later date circumstances change and the employee is required to attend the workplace for a period that extends beyond 24 months, it will stop being a temporary workplace from the date that the expectation changed.

Example 13 — the 24-month rule

Hassan has worked for his employer for 3 years and is sent to perform full-time duties at a workplace for 28 months.

The posting is unexpectedly ended after 18 months. No tax relief is available for the cost of travel between his home and the workplace, because his attendance is expected to exceed 24 months (though in fact it does not).

The workplace is therefore a permanent workplace and the journey is ordinary commuting.

Example 14 — the 24-month rule

Richard has worked for his employer for 3 years. He is sent to perform full-time duties at a workplace for 18 months. After 10 months the posting is extended to 28 months.

Tax relief is available for the full cost of travel to and from the workplace during the first 10 months (while his attendance is expected to be for less than 24 months), but not after that (once his attendance is expected to exceed 24 months).

Example 15 — the 24-month rule

Sarah has worked for her employer for 7 years and is sent to perform full-time duties at a workplace for 28 months. After 10 months the posting is shortened to 18 months.

No tax relief is available for the cost of travel to and from the workplace during the first 10 months (while her attendance is expected to exceed 24 months), but tax relief is available for the full cost of travel during the final 8 months (once her attendance is no longer expected to exceed 24 months).

For the 24 month rule to apply, both parts of the test must be met; for a workplace to be deemed permanent, the employee must have spent or be likely to spend more than 40% of their working time at a workplace and they must attend it or be likely to attend it over a period lasting more than 24 months.

Example 16 — the 24-month rule

Edward lives and works in Portsmouth where he is employed as an engineer. His employer sends him to work in Southampton for 1 and a half days a week for 28 months. For the rest of the week he continues to work in Portsmouth which remains a permanent workplace.

In considering whether Edward is entitled to tax relief for travel between home and Southampton it’s important to look at the amount of time he expects to spend there each week and for how long he expects to be in Southampton.

Because he expects to be in Southampton, for less than 40% of his working time, albeit over a period longer than 24 months, and he retains a permanent workplace in Portsmouth, Southampton is a temporary workplace for Edward and he is entitled to tax relief for the cost of getting there and back.

Example 17 — the 24-month rule

Caroline is employed as a laboratory assistant. She lives in Newport and works in Cardiff. Her employer opens a new laboratory in Swansea. Caroline is sent to work there 4 days a week and expects to be there for 30 months.

She is not entitled to tax relief for travel from home to Swansea because she is spending more than 40% of her time at the new laboratory and expects to be there for more than 24 months. It’s therefore a permanent workplace.

Caroline is not entitled to tax relief for travel from home to Cardiff for the one day a week she goes there because her attendance there is not to perform a task of limited duration or for a temporary purpose. The Cardiff laboratory remains a permanent workplace.

Example 18 — the 24-month rule

Steven is employed as a financial adviser working in Brighton. His employer sends him to an office in Bournemouth for one day a week over a 10 month period.

He travels to Bournemouth directly from his home in Hastings. Steven is entitled to tax relief for his travel to Bournemouth because he has gone there for a temporary purpose.

He does not expect to spend more than 40% of his time there nor does he expect to be going there for more than 24 months.

Example 19 — the 24-month rule

Neil is employed as a speech therapist at a hospital in Leeds. His employer sends him to Bradford for 3 days a week to supervise a new department there.

He expects to be in Bradford for 18 months. Neil is entitled to tax relief for his travel from home to Bradford.

Although he is spending more than 40% of his time in Bradford he does not expect to be there for more than 24 months so Bradford is a temporary workplace.

Example 20 — the 24-month rule

Alan lives in Tewkesbury and has a part-time job working 2 days a week in Cheltenham as a telephonist for an insurance company. He is asked to spend one of his 2 working days covering for a colleague at a branch in Gloucester for a period of 32 months.

Alan is not entitled to tax relief for travel between home and Gloucester because, while he spends only one day a week in Gloucester, this is more than 40% of his working time and he expects to be there for more than 24 months.

Alan is not entitled to tax relief for the journey he makes between home and Cheltenham on the other day he works because Cheltenham remains a permanent workplace.

Usually it will be clear whether or not an employee expects to spend more than 40% of their working time at a particular workplace over a period of more than 24 months.

Where there is some uncertainty, cases should be decided on their facts. An obvious starting point is what the employee has been told about the length of the assignment. Another point to consider may be whether the employee has moved home as a result of the change in workplace.

An employee may be less likely to relocate for a posting that is expected to last under 24 months than for one that is expected to last longer. That is not to say, if someone does move home as a result of a change of workplace, it necessarily means they expect the new workplace to be permanent, or that if they do not move home they necessarily expect the new workplace to be temporary.

Moving home is not a test, it’s only one factor to consider — but it’s an important one. Read paragraph 8.9 of Tax rules on other types of travel and related expenses (Chapter 8) .

Long construction projects

It will often be the case in the construction industry that workers will be moved from site to site on a regular basis by their employer. In these circumstances, where the employee’s attendance at the site is not expected to last longer than 24 months it will be considered a temporary workplace and tax relief will be available for the cost of travel and subsistence incurred in travelling to that site.

It is important to remember when applying the 24 month rule that the test is whether the employee has spent or is likely to spend more than 40% of their working time at a workplace for a period which lasts or is likely to last more than 24 months.

This means that where an employee is initially expected to work at a site for a period of less than 24 months but at a later date their employer extends the period to longer than 24 months, it will be a temporary workplace up until the date that the period is extended, after which it will be a permanent workplace.

Similarly, where an employee is needed to work at a particular site on a construction project which is initially expected to last 18 months that site will be a temporary workplace.

If, for example due to delays, that project is later extended so that it‘s expected to last for 30 months and the employee is expected to carry on working at the site for the duration of the project, that site will become a permanent workplace from the date that project’s expected duration changed.

Breaks in attendance

A period of continuous work can remain continuous even where there is a break in attendance.

Example 21 — breaks in attendance

Susan is employed as a human resources consultant. She expects to spend all her working time at a client’s site for 23 months.

She works full-time at the client’s site for 17 months developing a new staff appraisal system and then deals with unexpected priority work elsewhere for 3 months. She then returns to the client’s site for a further 6 months to co-ordinate the roll-out of the new system.

Susan is entitled to tax relief for her travel from home to the site during the first 17 months because she does not during that time expect to be at the site for more than 24 months. She is not, however, entitled to tax relief for her travel from home to the client’s site for the further 6 months.

That is because she now expects to spend 23 out of the 26 months at that site, which will be more than 40% of her working time over a period longer than 24 months.

Construction projects in phases

Sometimes construction projects will be completed in phases. Where this happens employees working on the construction project site may be moved by their employer to work on a different project in the intervening period and then later return to the original site to work on the next phase of the project.

In determining whether the 24 month rule applies in these circumstances you must still consider whether the employee has attended the workplace for more than 40% of their working time over a period of more than 24 months. The fact that there is a break in the employee’s attendance at the workplace does not alter this.

Example 22 — construction projects in phases

John is a labourer employed by a large construction company to work on the building of a new airport terminal. The building work is to be carried out in phases with the first phase expected to take 18 months to complete.

John attends the site for 18 months until the first phase is completed. He has no expectation of returning to that site. His employer then moves him to a different building project for 6 months after which his employer asks him to return to the original site to complete the second phase of building work which lasts 12 months.

The purpose of John’s attendance is to complete a task of limited duration so during the first 18 months it will be a temporary workplace as John’s attendance is for a period of less than 24 months.

However, when he returns to the airport site he expects to spend 30 out of 36 months working there, and expects to spend more than 40% of his working time there in a period lasting more than 24 months (18 + 6 + 12 = 36 months). This means that during the final 12 months the airport site will be a permanent workplace.

Example 23 — construction projects in phases

Robert is a labourer employed by a construction company to work on the building of a new sporting venue. The first phase of the sporting venue project lasts for 6 months.

Robert attends the site 5 days a week (a total of 132 days over the 6 month period).

After the first phase is complete Robert’s employer moves him to work on a different project site for 6 months. Robert does not expect to return for the second phase of construction at the sporting venue. He attends the second site for a total of 132 days over the 6 month period.

Robert’s employer then moves him to work on a third construction site. After 3 months working on the third site (66 working days) the second phase of the sporting venue project starts. This phase is expected to last 12 months.

Robert’s employer then asks him to work one day a week at the sporting venue and 4 days a week at the third site. Over the 12 month period Robert works 52 days at the sporting venue and 212 days at the third property site.

The sporting venue is capable of being a temporary workplace as the purpose of Robert’s attendance is to complete a task of limited duration. During the first 6 months it will be a temporary workplace as Robert’s attendance is for less than 24 months.

When Robert returns to the sporting venue site he expects to spend a total of 184 days there (132 in the first phase plus 52 in the second phase) out of 594 working days over the whole period which works out to 31% of his working time. Although the total period lasts more than 24 months (6 + 6 + 3 + 12 = 27), as Robert only spends 31% of his working time there the sporting venue site remains a temporary workplace.

Example 24 — construction projects in phases

Roger is a labourer employed by a construction company to work on the building of the same new sporting venue as Robert. The first phase of the sporting venue project lasts for 6 months.

Roger attends the site 5 days a week (a total of 132 days over the 6 month period).

After the first phase is complete Roger’s employer moves him to work on a different project site for 6 months. Roger does not expect to return for the second phase of construction at the sporting venue. He attends the second site for a total of 132 days over the 6 month period.

Roger’s employer then moves him to work on a third construction site. After 3 months working on that site (66 working days) the second phase of the sporting venue project starts. This phase is expected to last 12 months. Unlike Robert, Roger’s employer asks him to work 3 days a week at the sporting venue and 2 days a week at the third site.

This means that over the 12 month period Roger works 158 days at the sporting venue and 106 days at the third site.

The sporting venue is capable of being a temporary workplace as the purpose of Roger’s attendance is to complete a task of limited duration. So during the first 6 months it will be a temporary workplace as Roger’s attendance is for less than 24 months.

When Roger returns to the sporting venue site he expects to spend a total of 290 days there (132 in the first phase plus 158 in the second phase) out of 594 working days over the whole period which works out to 49% of his working time.

As the total period lasts more than 24 months (6 + 6 + 3 + 12 = 27) and as Roger spends 49% of his working time there the sporting venue site will be a permanent workplace when he returns for the second phase.

No requirement to return to a permanent workplace

An employee does not need to have a permanent workplace to go back to, to get tax relief for travel to a temporary workplace.

Example 25 — no requirement to return to a permanent workplace

Viv starts a new job as a trainee manager for a building society. When she starts her job her employer has not decided where she will be based. As part of her induction into the building society, for the first 2 months Viv is required to spend a few weeks working full-time at each of a number of branches learning about the wide range of services the building society provides. After 2 months she is given a permanent posting to a branch in Swansea.

Viv is entitled to tax relief for the full cost of her journeys from home to the branches she visits in the first 2 months of her employment. Viv is not entitled to tax relief for the cost of travelling from her home to Swansea, once this becomes her permanent posting, because this is an ordinary commuting journey.

The fixed term appointment rule

The fixed term appointment rule prevents a workplace being a temporary workplace where an employee attends, or is likely to attend, it in the course of a period of continuous work for all or almost all of the period that they’re likely to hold the employment.

A period of continuous work for this purpose has the same meaning as it does for the 24 month rule – that is it’s a period during which the employee spends or is likely to spend more than 40% of their working time at a particular workplace.

For the purpose of operating the fixed term appointment rule we regard a period as being all or almost all of the period that the employee is likely to hold the employment where that period is more than 80% of the likely duration of the employment.

This means that the test is whether the employee has spent, or is likely to spend, 40% or more of their working time at that particular workplace for more than 80% of the likely duration of the employment.

The fixed term appointment rule will also apply where an employee’s duties are defined by reference to a geographical area. Read paragraph 3.32.

Example 26 — the fixed term appointment rule

Mike is taken on for a fixed term employment of 18 months to work at a particular site. No tax relief is available for the cost of travel to and from the site during that period.

Example 27 — the fixed term appointment rule

Laura is employed as a research scientist on a fixed term contract lasting 15 months. Most of her work is to be done in research laboratories in Upminster but to familiarise her with equipment which is new to her, her employer first sends her to the manufacturer’s premises in Inverness.

Laura is entitled to tax relief for her travel to and from Inverness, but not for her travel from home to and from Upminster because it’s the place where she will carry out duties for almost all of her employment.

Depots and similar bases

Where the main reason an employee regularly attends a workplace is because it’s the:

• base from which they work
• place where they’re routinely allocated we’ll not regard their attendance as being of a limited duration or for a temporary purpose

Example 28 — depots and similar bases

Ian is employed as a bus driver. He picks up his vehicle from a depot each day.

Attendance at that depot at the start and finish of each shift may be brief but the depot is still his permanent workplace.

There is no tax relief for the cost of Ian’s travel between home and the depot because it’s ordinary commuting.

This does not mean that every place from which an employee works or at which they are allocated tasks is necessarily a permanent workplace.

We’ll regard a depot or similar workplace as a permanent workplace if:

• the employee attends it regularly
• the main reason the employee goes there is because it’s the place from which they work or at which they’re routinely allocated tasks
• it’s the main or only place from which the employee works or at which they’re routinely allocated tasks

Example 29 — depots and similar bases

Jane is employed as a management consultant. She has no permanent workplace. She spends most of her time working from home or at the premises of various clients.

At other times she ‘hot-desks’ at her employer’s offices in various locations or works on the train while travelling between clients.

Jane can be allocated tasks while she is at any of these places. But this is not the reason she goes there. She goes to visit clients and carry out other tasks of limited duration.

Even though she is sometimes allocated tasks at each of these places none of them is her permanent workplace.

However, where an employee regularly attends a workplace to be routinely allocated tasks while there, that workplace will be a permanent workplace — even if certain tasks are allocated to the employee elsewhere.

Example 30 — depots and similar bases

Matthew is employed as an electrician. Each morning he visits a depot where he is given his job list for the day.

His employer usually contacts him during the day to make changes to that job list. He is therefore, allocated tasks in many different places.

However, Matthew’s depot is still the place he attends regularly where he is routinely allocated tasks and it’s, therefore, his permanent workplace. So, travel between his home and the depot is ordinary commuting for which no tax relief is available.

Matthew will still be able to claim tax relief for his business travel.

Example 31 — depots and similar bases

Jill is employed as a plumber. She has no permanent workplace and can work on more than 100 sites in any one year. She receives instructions about where to work over the phone.

She calls into her employer’s premises most Wednesdays to collect piping and replacement tools. Calls of this type do not make the employer’s premises into a depot or other permanent workplace.

Jill can claim tax relief for all her journeys.

Duties defined by reference to a particular geographical area

Some employees have a job where their duties are defined by reference to a particular geographical area. Where these employees have no other permanent workplace the geographical area will be their permanent workplace.

In each case the test will be whether the employee’s duties are defined by reference to a particular geographical area.

It is important to remember that an employee will only have a geographical area as their permanent workplace where all the following conditions are met.

• The employee has no other permanent workplace.
• The employee attends the area in the performance of their duties.
• The employee has a job where the duties are defined by reference to a geographical area.

Example 32 — duties defined by reference to a particular geographical area

Henry lives in Norwich and is a relief manager for a chain of East Anglian regional tourist board offices. He shares responsibility for providing cover for all the offices, attending an office for a full day on each occasion.

There is no regular pattern to his work. His duties are defined by reference to a particular geographical area.

As the area is his permanent workplace Henry is not entitled to tax relief for his non-business travel costs.

Example 33 — duties defined by reference to a particular geographical area

Liz is a social worker. Her duties are defined by reference to an area but she has an office which she regularly attends. Although much of her time is spent visiting clients within her area, her office is a permanent workplace.

So her travel between home and the office is ordinary commuting for which she is not entitled to tax relief.

Her travel to and from the clients is business travel.

Example 34 — duties defined by reference to a particular geographical area

Hugh is employed by a firm of land agents. His contract of employment defines his duties by reference to the county of Lancashire. Hugh does not live in Lancashire.

However, Hugh actually works in a different office each day of the week but in the same office on the same day each week.

Hugh is not entitled to tax relief for any of his journeys from home to any of the offices including his travel from the edge of Lancashire to any of the offices he visits.

This is because the rules for areas do not apply since Hugh has 5 permanent workplaces (read paragraph 3.10).

For employees who have an area treated as their permanent workplace, the whole of the geographical area is the workplace.

So if they live outside that area the journey between home (or any other place they visit other than in the performance of the duties of that employment) and the edge of the geographical area is ordinary commuting with no tax relief available for the cost of that journey.

Example 35 — duties defined by reference to a particular geographical area

Charlotte is employed as a gamekeeper on a large country estate. She does not work at any particular site; her duties are defined in terms of the estate as a whole. The estate as a whole is her permanent workplace.

Charlotte lives outside the estate. She is not entitled to tax relief for the cost of her travel between home and the boundaries of the estate – that travel is ordinary commuting.

Example 36 — duties defined by reference to a particular geographical area

Mark works on the London Underground network. He has no office and his duties are defined by reference to the area served by the network – so the whole of this geographical area is his permanent workplace.

Mark lives in Leeds. Each Monday he travels to London and stays in a hotel before returning home on Friday. He is entitled to tax relief for the full cost of the business journeys he makes within the geographical area served by the London Underground network.

No tax relief is available for the cost of his journey between home and the edge of that geographical area or for the cost of his hotel accommodation in London. These costs are attributable to ordinary commuting.

An employee whose duties are defined by reference to a particular geographical area is entitled to tax relief for the full cost of business travel:

• made within the geographical area
• to other workplaces outside the area

Example 37 — duties defined by reference to a particular geographical area

Hope lives in Perth and is employed by a Scottish utility company. She has no office and her duties are defined by reference to the whole of the geographical area of Scotland which is her permanent workplace.

Sometimes Hope has to travel long distances within Scotland and occasionally she goes to London on business. This often involves meals while travelling and staying in hotels.

Hope is entitled to tax relief for these travel costs in full.

Where an employee has no site that is their permanent workplace and the duties of the employment are defined by reference to a geographical area, the occasional performance of duties outside that area will not prevent the area from being a permanent workplace.

Example 38 — duties defined by reference to a particular geographical area

Gary is a police officer. He has a community liaison role which mainly involves visiting schools and other organisations within the area covered by his police authority. Although nominally attached to a particular station, Gary does not regularly attend that station and no particular site qualifies as his permanent workplace.

However, his duties are defined by reference to the area covered by the police authority, so that geographical area is his permanent workplace.

Each year Gary visits universities across the country to recruit new officers. He visits each university for a temporary purpose. These visits do not change his permanent workplace which remains the geographical area covered by his police authority.

Employees who work at home

Whether or not an employee’s home is a workplace does not affect the availability of tax relief for travel expenses. Travel expenses from home to a permanent workplace will only qualify for tax relief if the journey qualifies as travel in the performance of the duties of the employment.

Even though it may have been accepted that the employee’s home is a workplace, it does not necessarily follow that they’ll be entitled to tax relief for the cost of travel between their home and a permanent workplace.

This is because the place where an employee lives will ordinarily be down to their personal choice. The expense of travelling from their home to any other place is a consequence of that personal choice; not an objective requirement of the job.

Example 39 — employees who work at home

Chandra is a home based sales consultant living in Derby for a company whose office is in Nottingham. He carries out a large part of his substantive duties at home.

He was employed on the basis that his employer requires him to work from home 4 days a week and one day a week in the Nottingham office. On the day that he attends the office a desk and facilities are available for him to use however these are not available on the other 4 days.

Chandra is entitled to claim tax relief for some of the additional costs he incurs from having to work from home however he is not entitled to any tax relief for the costs he incurs in travelling from his home to the Nottingham office.

This is on the basis that the Nottingham office is Chandra’s permanent workplace as he attends it regularly and his attendance is not to perform a task of limited duration or for some other temporary purpose.

That Chandra’s home is a workplace for the purpose of claiming tax relief for additional household expenses does not change the fact that he is travelling between his home and a permanent workplace.

His travel to the Nottingham office is ordinary commuting.

Where an employee performs substantive duties of their employment at home as an objective requirement of the job, we may accept their home as a workplace for the purposes of the ‘travelling in the performance of the duties’ rule (read paragraph 2.5).

Where this is the case the employee will be entitled to tax relief for the expenses of travelling from home to other workplaces as their travel is in the performance of their duties.

Usually, we’ll only accept that working at home is an objective requirement of the job if the employee needs certain facilities to perform those duties, and those facilities are only practically available to the employee at their home.

We will not accept that working at home is an objective requirement of the job if the employer provides appropriate facilities in another location that could be practically used by the employee, or the employee works from home as a matter of choice.

Example 40 — employees who work at home

Angela is an area sales manager who lives in Glasgow. She manages the company’s regional sales team across Scotland. As the company’s nearest office is in Newcastle Angela cannot practically attend that office and needs to carry out her administrative work at home.

Angela’s employer needs her to keep all client information securely at home, and so Angela cannot carry out that administrative work anywhere else.

Angela is entitled to tax relief for the expenses she incurs in travelling from her home to the company’s office in Newcastle, as well as for her journeys within Scotland.

Even where the employee works at home as an objective requirement of the employment, tax relief for the cost of travel between their home and their permanent workplace will only be due for travel made on days where the employee’s home is a workplace.

Only on those days is the employee travelling between 2 workplaces. On other days the employee is travelling between their home and a permanent workplace, which is ordinary commuting.

Example 41 — employees who work at home

Peter works in his employer’s office for 4 days every week but the requirements of the job dictate that he must work at home every Friday. It’s accepted that his home is a workplace on a Friday.

His travel from home to his employer’s office on Monday to Thursday is ordinary commuting because those premises are a permanent workplace so no tax relief is available for his travel costs on those days.

However, if he is unexpectedly required to visit his employer’s premises on a Friday to carry out the duties of his employment he will get tax relief for his travel costs because he is travelling between 2 workplaces.

Modern information and communications technology has allowed many more employees to work from home on a flexible or hybrid basis. Under such arrangements, the employee will have a base office and journeys from home to that location will be ordinary commuting.

Example 42 — employees who work at home

Elliot’s employer has decided to offer hybrid working to its employees. This allows employees to mix working at home with working in the Bristol office. This flexible way of working is voluntary for Elliot, so he is not required to work from home as part of his role.

Elliot decides to split his time between working at home and in the Bristol office. Elliot’s office will remain his permanent workplace when he begins to work in a hybrid way. This means Elliot cannot claim tax relief on journeys made from his home to the office because such journeys are ordinary commuting.

An employee is not entitled to tax relief for journeys between their home and any other place attended for reasons other than work, even when home is a workplace. Such travel is private travel.

Tax relief will of course be allowed for the costs incurred on travelling between the employee’s home and a temporary workplace.

Agency workers

Where a worker provides their services through an agency and their income is subject to tax as employment income, and they generally attend only one workplace in respect of each engagement that workplace will usually be a permanent workplace.

Where nurses, domestic workers and others provide their services through an agency and do a number of different jobs on the same day, those workers may get tax relief for travel between those jobs, but not for travel from home to the first job and to home from the last job on each day.

Example 43 — agency workers

Beth is an accounts clerk who gets all her work through an employment agency. She rarely takes a job which lasts more than 2 weeks. Beth always travels straight from home to work at the premises of the employment agency’s client.

She is not entitled to tax relief for any of these journeys because each job is treated as a separate employment and so all her journeys are ordinary commuting.

Working through an employment intermediary

There are rules about workers who provide their services through an employment intermediary including those employed under overarching contracts of service. When:

• such a worker personally provides services (other than an exception for ‘excluded services’) to a client through an employment intermediary, including a recruitment agency, umbrella company, personal service company ( PSC ) or other similar structure
• their work is similar to that of an employee, then each assignment is treated as a separate employment

A worker who regularly commutes from home to a workplace for each assignment is not eligible for relief on travel and subsistence because such journeys are ordinary commuting. Read section 3.2.

If the work is not similar to that of an employee, each workplace is a temporary workplace with the tax and National Insurance contributions treatment following the existing rules for travel to temporary workplaces.

Example 44 — working through an employment intermediary

Joe is a warehouse worker and is engaged via an employment intermediary which employs him under an overarching contract of service. His work is similar to that of an employee.

The client’s premises to which he travels daily to work are permanent workplaces and as such the travel from his home to those premises is ordinary commuting.

Example 45 — working through an employment intermediary

Catherine, a computer consultant, is the only employee of a company which she controls. She is a specialist in banking systems. She spends 18 months working full-time at the headquarters of a merchant bank in Lombard Street in the City of London. She then moves next door to design a new computer system for a different bank where she expects to stay working full-time for 22 months.

After that assignment she moves to work at another bank on Cheapside for 17 months. If Catherine had been engaged directly by clients, she would’ve been considered as an employee.

Catherine is not entitled to tax relief for her travel from home to these workplaces because she is providing her services through a PSC and each assignment is treated as a separate employment.

Exception for excluded services

Excluded services are those provided wholly in the client’s home.

Example 46 — exception for excluded services

Paul works away from home during the week only returning at weekends. As he’s away so much he decides to get help with his domestic chores. During the summer he engages a gardener, George.

George works through his own PSC . As George provides his services in Paul’s home, the rules which treat the client’s workplace as a permanent workplace do not apply. So, George’s travel to Paul’s home is travel to a temporary workplace.

People with more than one workplace at the same time

Someone who has 2 or more employments or is in an employment which requires regular attendance at more than one workplace, may have more than one permanent workplace during the same period.

Example 47 — people with more than one workplace at the same time

John is a mortgage adviser employed by a chain of building societies. He works 5 days each week but spends each day in a different branch in a different town.

He works in the same branch on the same day each week. John is not entitled to tax relief for his travel from home to any of the branches.

That is because he travels regularly to each branch and his work is neither of limited duration nor for a temporary purpose. So each branch is a separate permanent workplace.

Example 48 — people with more than one workplace at the same time

Mary is employed as an office manager by a firm of architects. The firm operates from offices in Bristol and Bath. Mary spends each morning at the office in Bristol and each afternoon at the office in Bath.

Each office is a permanent workplace. Mary is not entitled to tax relief for the cost of travel between her home and either of the offices. However, travel between the 2 workplaces is travel in the performance of her duties. So tax relief is available for the full cost of this travel.

Example 49 — people with more than one workplace at the same time

Tom is a computer games programmer working for a large game studio. He lives in Birmingham and travels daily to the company’s head office which is in Coventry. This is his permanent workplace and his journeys between home and Coventry are ordinary commuting.

The computer game’s artwork is produced by a team of graphic designers who are based at one of the company’s regional offices in Lichfield.

The game is developed in fortnightly sprints and every 2 weeks Tom’s duties require him to visit the Lichfield office to lay down goals for the forthcoming sprint and assess whether the goals he set at his previous visit have been achieved. Tom travels directly from his home in Birmingham to Lichfield on these occasions.

The fortnightly Lichfield visits are regular and part of a series of visits to the same workplace for the continuation of a particular task. Lichfield is therefore also a permanent workplace and travel from his home to those premises is ordinary commuting.

Most employees will not have more than one permanent workplace at the same time. Each case will depend on the particular facts. Things that would point to a workplace being a second permanent workplace include:

• the employee regularly performs a significant part of their duties there
• people would expect to be able to contact the employee at the second location
• the employee has an office, or desk, and support services at the second workplace which they regularly use
• the employee performs similar tasks at each workplace
• the employee does not attend the workplace solely to do specific tasks such as attendance at a specially arranged meeting (read paragraph 3.13).

Managers working across sites

It is common for managers to have staff in more than one site across various geographical locations within the UK. Where this is the case and they’re required to attend each site regularly it’s possible that those individuals may have more than one permanent workplace.

Example 50 — managers working across sites

June is a manager within a government department with staff located in offices in Birmingham and London. June lives near to Birmingham and uses the Birmingham office as her main base, where she performs many of the duties of her employment and considers it her permanent workplace. She has a desk there and her personal assistant works there.

June is expected to visit her staff in London regularly, she spends 3 days a week in Birmingham and 2 days a week in London. She does not have a permanent desk in the London office although there is always a desk available for her to use near her team.

June’s travel to the London office is regular and as her attendance is simply to carryout the ongoing duties of her management role it’s neither to perform a task of limited duration or for some other temporary purpose. The London office is, therefore, a second permanent workplace.

June is entitled to tax relief for the cost she incurs on travelling between the Birmingham and London offices as this is travel in the performance of the duties. She is not entitled to tax relief for travel from her home to either the Birmingham or London offices as this is ordinary commuting.

Example 51 — managers working across sites

Helen is a senior manager in a large banking group which has its head office in London. She lives in Leeds and has a permanent workplace at the company’s Leeds office where she carries out the ongoing duties of her role.

Each week Helen needs to travel to the London office to attend various specific management board meetings. She travels to London 3 days each week for this purpose.

Helen’s attendance at the London office is regular, however because it’s purely for the purpose of attending specifically arranged management meetings rather than for the purpose of carrying out the ongoing duties of her role, her attendance is for a temporary purpose. As such the London office is capable of being a temporary workplace.

Helen’s attendance at the London office 3 days a week is, however, more than 40% of her working time and is expected to last longer than 24 months. The London office is, therefore, a permanent workplace.

Example 52 — managers working across sites

Ajit works for a sales company managing teams in Reading and Oxford. The company’s head office is in London.

Ajit needs to split his time equally between the Reading and Oxford offices to carry out his management duties. He has a desk and computer in both offices.

Once a week he is also travels to the London office to attend a regular management meeting with all the managers across the company.

Both the Reading and Oxford offices are permanent workplaces as Ajit attends them regularly and his attendance is for the ongoing duties of his role rather than to complete a task of limited duration or for some other temporary purpose.

Therefore he is entitled to tax relief for the costs he incurs in travelling between Oxford and Reading but he is not entitled to tax relief for the costs he incurs in travelling from his home to either the Oxford or Reading offices.

Whilst Ajit’s travel to the London office is regular the purpose of his visits is self-contained therefore his attendance is for a temporary purpose and the London office is a temporary workplace.

No single factor is decisive in establishing whether a second location is a permanent workplace. It depends on the particular work pattern.

If, for example, someone regularly spends 40% of their time at a second location, it’s unlikely, given the frequency of the visits that each visit would be to perform a task of limited duration or for some other temporary purpose.

In these circumstances, we would normally presume that the second location is a permanent workplace.

When a workplace stops being a permanent workplace

Sometimes a place may stop being an employee’s permanent workplace. This may happen, for example, because an employer moves to a place some distance away.

Example 53 — when a workplace stops being a permanent workplace

Emily is employed full-time by a bank. She is sent to work for 6 months in a newly opened branch in another town. At the end of that period she accepts a promotion and stays at the new branch. At that point the new branch becomes Emily’s permanent workplace.

Two years later when Emily is asked to cover for an absent colleague in her old branch for a couple of months, she is entitled to tax relief for any cost of travelling from home to the old branch because that is a temporary workplace.

Passing work on the way to somewhere else

An employee may pass a permanent workplace on the way to or from a temporary workplace.

If the employee stops and performs substantive duties at the permanent workplace then there are 2 journeys — ordinary commuting between home and the permanent workplace and a business journey between the permanent workplace and the temporary workplace.

Tax relief will be available for the cost of the second of these journeys — but not the first.

Where the employee does not stop at the permanent workplace, or any stop is incidental to the business journey, all of the journey is business travel.

Example 54 — passing work on the way to somewhere else

Darren drives each day between his home in Southampton and his office in Winchester. One day he has to travel on business to Birmingham and back.

He drives directly from home to Birmingham but stops off at his office to pick up some papers.

His stop is incidental to his business journey. His business journey is from his home in Southampton to Birmingham and back.

Tax relief is available for the cost of his journey from his home to Birmingham and back.

Example 55 — passing work on the way to somewhere else

Andrew drives each day between his home in Gloucester and his office in Bristol. One day he needs to attend a training event in Bath.

Rather than travelling directly to Bath from his home he has to stop off at his office in Bristol to take part in a telephone conference about a project he has been working on.

After the telephone conference has finished he drives to the training event in Bath.

As Andrew has stopped off at his workplace to carry out substantive duties on the way to the training event in Bath the first part of his journey between home and Bristol is ordinary commuting.

Tax relief is available for the cost of his journey from Bristol to Bath, and from Bath back to his home address as this is travel to a temporary workplace.

Emergency call-out expenses

Employees sometimes have to travel to a permanent workplace unexpectedly or in an emergency. Where the cost of that journey would not qualify for tax relief in normal circumstances, it will not qualify for tax relief just because the journey was made in response to an emergency.

It makes no difference if the journey takes place outside normal working hours or if the employee is returning to the workplace having completed their normal duties there.

Example 56 — emergency call-out expenses

Isabel is required to be a keyholder for her permanent workplace. One night she is called out by the police responding to a burglar alarm.

Isabel is not entitled to tax relief for her journey from home because it’s ordinary commuting.

Exceptionally, where an employee is obliged to perform duties at home and while travelling to an emergency at a permanent workplace, the travel may be regarded as travel between 2 workplaces. In such circumstances, the cost of that travel will qualify for tax relief.

To get tax relief, the employee has to:

• give advice on handling the emergency before starting the journey
• accept responsibility for those aspects appropriate to their duties from that time
• have a continuing responsibility for the emergency whilst travelling to the permanent workplace

Example 57 — emergency call-out expenses

Jack is employed as a vet. He operates a surgery from his home. He also works at an animal hospital some distance away. It’s an objective requirement of his employment that he perform his duties at these 2 workplaces.

One night he needs to attend an emergency at the hospital. He is phoned at his home or surgery and immediately takes responsibility for the emergency and issues instructions on action to be taken.

While travelling to the hospital he uses a hands-free mobile phone to continue to control the response to the emergency. The journey is between 2 workplaces in the performance of Jack’s duties.

Jack is entitled to tax relief for the cost of this journey to the hospital.

Employee on standby

Where an employee is on stand-by and can be called out at short notice, they are still not entitled to tax relief for a journey which is ordinary commuting.

Example 58 — employee on standby

Jane works fixed hours in a restaurant, but can also be called in when there are staff shortages. When she is called in outside her normal hours she is not entitled to tax relief for travel from home to the restaurant because this is ordinary commuting.

Section 3.39 has been added to explain the rules around claiming tax relief for flexible and hybrid workers.

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175 USD per day -including a decent Hotel accommodation and Indian food.

That depends entirely what your hotel requirements are and how well you buy your hotel. To a lesser extent I'd say it depends on how much you need to travel around and whether you can use the metro or if you will be at the mercy of taxi drivers.

But if you want a straight answer, I would say: Yes.

I would ad a bit to the "yes" of a previous participant: yes, but where will be your cheap hotel - your business - interest area and your Indian food (not available in every corner)?

Thanks Mr.Chimbulak and Mr. Veresch.

My proposed place of stay likely will be at City center and the business travel will be taken care by my client. However I have to take care of my sight seeing trip, hotel and (Asian Vegetarian)food expense.

Any suggestion for other place of stay also may be made.

If you will be there more than a dayt r two look into an apartment rental. It will typically be about half the cost of a hotel or less. There are many in the city center. BTW there was an indian restaurant on Tverskaya near the Marriott Grand when we were there. That is a good area to stay.

I don't think you can get a hotel for USD 175/- at city centre..

Try Hotel Sputnik, which is not far from centre and this has an "in-house" indian restaurant. Average meal will cost around US$ 40/-. You can choose not to order a-la carte, and try to work out a "business Lunch" for around US$ 21 - US$ 30.

( you have to book in advance as the hotel is quite popular with business travellers)

Another option is Hotel Salyut or Hotel Dom Tourist( single room around US$ 100 ). There are 2-3 indian restaurants in walking distance to this hotel. But these hotels are far from the centre ( and from Metro) and you will need to use public transport

For your sight seeing purposes, this hotel is situated near a metro and also well connected by public transport.

There are 5-6 good indian restaurants located at various places in the centre and away from the centre.

If you can finalise your place of stay, i can direct you to the restaurants in the area.

This topic has been closed to new posts due to inactivity.

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HMRC issues new tax rules for workers - from travel expenses to emergency call-outs

Andy Wood explains the complexities of tax relief for travel expenses under HMRC's clarified rules, highlighting specific requirements and common misconceptions around eligibility.

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The Brits eligible for tax relief under HMRC’s updated travel rules have been revealed. Tax expert Andy Wood explains the complexities of tax relief for travel expenses under HMRC's clarified rules, highlighting specific requirements and common misconceptions around eligibility.

Andy warned: "Both employers and employees must maintain accurate records of travel purposes and workplace statuses to avoid compliance issues with tax rules. Misclassifying ordinary commuting as business travel can lead to non-compliance issues and potential disputes with tax authorities."

He went on: “The amount of tax an individual can claim back usually depends on several factors, such as the employee's tax rate and the total amount spent on eligible travel expenses. Employees should consult with a tax professional or use official tax calculators provided by tax authorities to determine the exact benefit they can expect based on their eligible expenses.”

READ MORE UK set to see scorching May heatwave ended by 'final' blast of winter

Work defined by location

Andy said: "The entire area becomes the permanent workplace for jobs defined by geographical location without a fixed office. Travel within this area for work purposes can qualify for tax relief, but journeys from home to the area’s edge are considered ordinary commuting. This scenario typically applies to roles such as sales or services that require mobility within a designated region."

"Tax breaks for travel aren't just for commuting; they also apply to different work situations, like temporary jobs or working at several locations. The important thing is whether you need to travel for your job away from your usual workplace. Both employees and employers should keep up with these rules to follow the law and get the most out of their tax benefits."

Misconceptions

Andy said: "Employees often apply for tax relief for their travel expenses, but not all types of travel qualify. Ordinary commuting, the travel between your home and permanent workplace, generally is not eligible for tax relief.

“A permanent workplace is where an employee goes regularly to perform their job duties and must be there to fulfil their role. This could be an office, factory, or any other site that the employee visits routinely as part of their normal work routine. Since this type of travel is part of an employee's regular commute, it does not qualify for tax relief.

“This means you can't claim back any travel costs to and from this location on your taxes. It's important to understand this distinction between ordinary commuting and travel to temporary workplaces—which can qualify for tax relief—both for adhering to tax laws and for accurate reporting on tax returns."

Emergency Call-Outs

Andy said: "Even in emergency call-outs, where an employee must return to their permanent workplace unexpectedly, the journey does not qualify for tax relief unless it's part of the employee's duties while travelling. This ensures that tax relief is granted only when the travel itself is a necessary aspect of the job."

24-month rule

He said: "The 24-month rule is particularly significant as it dictates that any location an employee attends for over 24 months, where they spend at least 40% of their working time, is considered a permanent workplace. This rule prevents tax relief claims after the prescribed period, which aligns with the policy intent to limit relief to genuinely temporary assignments."

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• Fewer than 1% of workers are estimated to be senior executives under the final rule.
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Trans-Siberian Railway Prices

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Home » Prices and Trans-Siberian Tickets » Trans-Siberian Railway Prices

Ticket prices for the Trans-Siberian Railway also depend on the current ruble exchange rate.

Is the Trans-Siberian Railway expensive?

Before starting on your Trans-Siberian Railway adventure you naturally want to know what the entire trip will cost. Although this sounds like a simple question, it is pretty difficult to answer. The Trans-Siberian Railway price of travel depends on the following factors:

• Which travel class do I want to use? The price for a first class ticket is about three times the price of a 3rd class ticket
• Am I willing to buy the tickets myself and assume responsibility for the organisation of the trip?
• How many stopovers do I want to make? The more breaks, the higher the total price.
• What sort of accommodation do I want? Will it be a luxury hotel or will a hostel dormitory be sufficient?
• What tours and excursions would I like to go on?
• What is the current exchange rate for rubles?

Basically, everything from a luxury to a budget holiday is available. If you buy yourself a 3rd Class nonstop ticket at the counter, a few hundred Euros will cover the price. All you will experience is a week on the Trans-Siberian train and will see nothing of the cities on the way. There is, however, any amount of room for upward expansion. Everyone makes different choices about which aspects they are willing to spend money on. I personally prefer to save money on accommodation and railcar class, visit as many cities and do as many trips as possible. To enable better classification of your travel expenses I have contrasted two typical traveler types. In the third column you can calculate the total cost of your own journey on the Trans-Siberian Railway. Please keep in mind that these are only rough estimations and not exact prices.

The all-in costs seem fairly high at first. However, they cover everything and it is quite a long journey taking four weeks. Many people forget to consider that when looking at the list. We should also deduct the running costs for food and leisure at home. I think most visitors to this page will classify themselves somewhere between the two categories, that is around the € 2,000 – € 2,500 range. When comparing these prices with other travel packages, you get the impression that it is hardly worthwhile travelling individually on the Trans-Siberian Railway. Please keep in mind that most packages last no more than 14 days and you are herded like cattle through the most beautiful locations.

If you spend less time on the Trans-Siberian Railway you will, of course, pay less. I chose this particular travel length because I prefer not to do things by halves. If you fulfill your dream of travelling on the Trans-Siberian Railway, enjoy it and don’t rush things. But it’s up to you, of course. Try playing around with the form a bit to find the appropriate price for your trip.

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Here’s what taxpayers need to know about business related travel deductions

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IRS Tax Tip 2022-104, July 11, 2022

Business travel can be costly. Hotel bills, airfare or train tickets, cab fare, public transportation – it can all add up fast. The good news is business travelers may be able to off-set some of those costs by claiming business travel deductions when they file their taxes.

Here are some details about these valuable deductions that all business travelers should know.

Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. The travel period must be substantially longer than an ordinary day's work and a need for sleep or rest to meet the demands the work while away.

Travel expenses must be ordinary and necessary. They can't be lavish, extravagant or for personal purposes.

Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.

Travel expenses for conventions are deductible if attendance benefits the business and there are special rules for conventions held outside North America .

Deductible travel expenses while away from home include the costs of:

• Travel by airplane, train, bus or car between your home and your business destination.
• Fares for taxis or other types of transportation between an airport or train station to a hotel, from a hotel to a work location.
• Shipping of baggage and sample or display material between regular and temporary work locations.
• Using a personally owned car for business which can include an increase in mileage rates .
• Lodging and non-entertainment-related meals .
• Dry cleaning and laundry.
• Business calls and communication.
• Tips paid for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to the business travel.

Self-employed or farmers with travel deductions

• Those who are self-employed can deduct travel expenses on  Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) .
• Farmers can use  Schedule F (Form 1040), Profit or Loss From Farming .

Travel deductions for the National Guard or military reserves

National Guard or military reserve servicemembers can claim a deduction for unreimbursed travel expenses paid during the performance of their duty .

Recordkeeping

Well-organized records make it easier to prepare a tax return. Keep records, such as receipts, canceled checks, and other documents that support a deduction.

More information:

• Publication 463, Travel, Gift, and Car Expenses
• IRS updates per diem guidance for business travelers and their employers

Subscribe to IRS Tax Tips

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Today's 30-year mortgage rates hold steady | May 3, 2024

Thinking about taking out a mortgage loan here are the current mortgage rates and the top factors that influence them..

Mortgage rates fluctuate almost daily based on economic conditions. Here are today’s mortgage rates and what you need to know about getting the best rate. ( iStock )

The interest rate on a 30-year fixed-rate mortgage is 7.375% as of May 3, which is unchanged from yesterday. 

With mortgage rates changing daily, it’s a good idea to check today’s rate before applying for a loan. It’s also important to compare different lenders’ current interest rates, terms, and fees to ensure you get the best deal. 

Rates last updated on May 3, 2024. Rates are based on the assumptions shown here . Actual rates may vary. Credible, a personal finance marketplace, has 5,000 Trustpilot reviews with an average star rating of 4.7 (out of a possible 5.0).

How do mortgage rates work?

What determines the mortgage rate.

• How to compare mortgage rates 
• Pros and cons of mortgages 

How to qualify for a mortgage

How to apply for a mortgage, how to refinance a mortgage.

• How to access your home’s equity

When you take out a mortgage loan to purchase a home, you’re borrowing money from a lender. In order for that lender to make a profit and reduce risk to itself, it will charge interest on the principal — that is, the amount you borrowed.

Expressed as a percentage, a mortgage interest rate is essentially the cost of borrowing money. It can vary based on several factors, such as your credit score , debt-to-income ratio (DTI), down payment , loan amount and repayment term.

After getting a mortgage, you’ll typically receive an amortization schedule , which shows your payment schedule over the life of the loan. It also indicates how much of each payment goes toward the principal balance versus the interest.

Near the beginning of the loan term, you’ll spend more money on interest and less on the principal balance. As you approach the end of the repayment term, you’ll pay more toward the principal and less toward interest.

Your mortgage interest rate can be either fixed or adjustable. With a fixed-rate mortgage, the rate will be consistent for the duration of the loan. With an adjustable-rate mortgage (ARM), the interest rate can fluctuate with the market.

Keep in mind that a mortgage’s interest rate is not the same as its annual percentage rate (APR). This is because an APR includes both the interest rate and any other lender fees or charges.

Mortgage rates change frequently — sometimes on a daily basis. Inflation plays a significant role in these fluctuations. Interest rates tend to rise in periods of high inflation, whereas they tend to drop or remain roughly the same in times of low inflation. Other factors, like the economic climate, demand, and inventory can also impact the current average mortgage rates.

To find great mortgage rates, start by using Credible’s secured website, which can show you current mortgage rates from multiple lenders without affecting your credit score. You can also use Credible’s mortgage calculator to estimate your monthly mortgage payments.

Mortgage lenders typically determine the interest rate on a case-by-case basis. Generally, they reserve the lowest rates for low-risk borrowers — that is, those with a higher credit score, income, and down payment amount. Here are some other personal factors that may determine your mortgage rate:

• Location of the home
• Price of the home
• Your credit score and credit history
• Loan type (e.g., conventional or FHA)
• Interest rate type (fixed or adjustable)
• Down payment amount
• Loan-to-value (LTV) ratio

Other indirect factors that may determine the mortgage rate include:

• Current economic conditions
• Rate of inflation
• Market conditions
• Housing construction supply, demand, and costs
• Consumer spending
• Stock market
• 10-year Treasury yields
• Federal Reserve policies
• Current employment rate

How to compare mortgage rates

Along with certain economic and personal factors, the lender you choose can also affect your mortgage rate. Some lenders have higher average mortgage rates than others, regardless of your credit or financial situation. That’s why it’s important to compare lenders and loan offers.

Here are some of the best ways to compare mortgage rates and ensure you get the best one:

• Shop around for lenders: Compare several lenders to find the best rates and lowest fees. Even if the rate is only lower by a few basis points, it could still save you thousands of dollars over the life of the loan.
• Get several loan estimates: A loan estimate comes with a more personalized rate and fees based on factors like income, employment, and the property’s location. Review and compare loan estimates from several lenders.
• Get pre-approved for a mortgage: Pre-approval doesn’t guarantee you’ll get a loan, but it can give you a better idea of what you qualify for and at what interest rate. You’ll need to complete an application and undergo a hard credit check.
• Consider a mortgage rate lock: A mortgage rate lock lets you lock in the current mortgage rate for a certain amount of time — often between 30 and 90 days. During this time, you can continue shopping around for a home without worrying about the rate changing.
• Choose between an adjustable- and fixed-rate mortgage: The interest rate type can affect how much you pay over time, so consider your options carefully.

One other way to compare mortgage rates is with a mortgage calculator. Use a calculator to determine your monthly payment amount and the total cost of the loan. Just remember, certain fees like homeowners insurance or taxes might not be included in the calculations.

Here’s a simple example of what a 15-year fixed-rate mortgage might look like versus a 30-year fixed-rate mortgage:

15-year fixed-rate

• Loan amount: $300,000
• Interest rate: 6.29%
• Monthly payment: $2,579
• Total interest charges: $164,186
• Total loan amount: $464,186

30-year fixed-rate

• Interest rate: 6.89%
• Monthly payment: $1,974
• Total interest charges: $410,566
• Total loan amount: $710,565

Pros and cons of mortgages

If you’re thinking about taking out a mortgage, here are some benefits to consider:

• Predictable monthly payments: Fixed-rate mortgage loans come with a set interest rate that doesn’t change over the life of the loan. This means more consistent monthly payments.
• Potentially low interest rates: With good credit and a high down payment, you could get a competitive interest rate. Adjustable-rate mortgages may also come with a lower initial interest rate than fixed-rate loans.
• Tax benefits: Having a mortgage could make you eligible for certain tax benefits, such as a mortgage interest deduction .
• Potential asset: Real estate is often considered an asset. As you pay down your loan, you can also build home equity, which you can use for other things like debt consolidation or home improvement projects.
• Credit score boost: With on-time payments, you can build your credit score.

And here are some of the biggest downsides of getting a mortgage:

• Expensive fees and interest: You could end up paying thousands of dollars in interest and other fees over the life of the loan. You will also be responsible for maintenance, property taxes , and homeowners insurance.
• Long-term debt: Taking out a mortgage is a major financial commitment. Typical loan terms are 10, 15, 20, and 30 years.
• Potential rate changes: If you get an adjustable rate , the interest rate could increase.

Requirements vary by lender, but here are the typical steps to qualify for a mortgage:

• Have steady employment and income: You’ll need to provide proof of income when applying for a home loan. This may include money from your regular job, alimony, military benefits, commissions, or Social Security payments. You may also need to provide proof of at least two years’ worth of employment at your current company.
• Review any assets: Lenders consider your assets when deciding whether to lend you money. Common assets include money in your bank account or investment accounts.
• Know your DTI: Your DTI is the percentage of your gross monthly income that goes toward your monthly debts — like installment loans, lines of credit, or rent. The lower your DTI, the better your approval odds.
• Check your credit score: To get the best mortgage rate possible, you’ll need to have good credit. However, each loan type has a different credit score requirement. For example, you’ll need a credit score of 580 or higher to qualify for an FHA loan with a 3.5% down payment.
• Know the property type: During the loan application process, you may need to specify whether the home you want to buy is your primary residence. Lenders often view a primary residence as less risky, so they may have more lenient requirements than if you were to get a secondary or investment property.
• Choose the loan type: Many types of mortgage loans exist, including conventional loans, VA loans , USDA loans , FHA loans , and jumbo loans. Consider your options and pick the best one for your needs.
• Prepare for upfront and closing costs: Depending on the loan type, you may need to make a down payment. The exact amount depends on the loan type and lender. A USDA loan, for example, has no minimum down payment requirement for eligible buyers. With a conventional loan, you’ll need to put down 20% to avoid private mortgage insurance (PMI). You may also be responsible for paying any closing costs when signing for the loan.

Here are the basic steps to apply for a mortgage , and what you can typically expect during the process:

• Choose a lender : Compare several lenders to see the types of loans they offer, their average mortgage rates, repayment terms, and fees. Also, check if they offer any down payment assistance programs or closing cost credits.
• Get pre-approved: Complete the pre-approval process to boost your chances of getting your dream home. You’ll need identifying documents, as well as documents verifying your employment, income, assets, and debts.
• Submit a formal application: Complete your chosen lender’s application process — either in person or online — and upload any required documents.
• Wait for the lender to process your loan: It can take some time for the lender to review your application and make a decision. In some cases, they may request additional information about your finances, assets, or liabilities. Provide this information as soon as possible to prevent delays.
• Complete the closing process: If approved for a loan, you’ll receive a closing disclosure with information about the loan and any closing costs. Review it, pay the down payment and closing costs, and sign the final loan documents. Some lenders have an online closing process, while others require you to go in person. If you are not approved, you can talk to your lender to get more information and determine how you can remedy any issues.

Refinancing your mortgage lets you trade your current loan for a new one. It does not mean taking out a second loan. You will also still be responsible for making payments on the refinanced loan.

You might want to refinance your mortgage if you:

• Want a lower interest rate or different rate type
• Are looking for a shorter repayment term so you can pay off the loan sooner
• Need a smaller monthly payment
• Want to remove the PMI from your loan
• Need to use the equity for things like home improvement or debt consolidation (cash-out refinancing)

The refinancing process is similar to the process you follow for the original loan. Here are the basic steps:

• Choose the type of refinancing you want.
• Compare lenders for the best rates.
• Complete the application process.
• Wait for the lender to review your application.
• Provide supporting documentation (if requested).
• Complete the home appraisal.
• Proceed to closing, review the loan documents, and pay any closing costs.

How to access your home’s equity 

If you need to tap into your home’s equity to pay off debt, fund a renovation, or cover an emergency expense, there are two popular options to choose from: a home equity loan and a home equity line of credit (HELOC) . Both a home equity loan and a HELOC allow you to borrow against your home’s equity but a home equity loan comes in the form of a lump sum payment and a HELOC is a revolving line of credit.

These two loan types have some other key similarities and differences in how they work:

What is a rate lock?

Interest rates on mortgages fluctuate all the time, but a rate lock allows you to lock in your current rate for a set amount of time. This ensures you get the rate you want as you complete the homebuying process .

What are mortgage points?

Mortgage points are a type of prepaid interest that you can pay upfront — often as part of your closing costs — for a lower overall interest rate. This can lower your APR and monthly payments. 

What are closing costs?

Closing costs are the fees you, as the buyer, need to pay before getting a loan. Common fees include attorney fees, home appraisal fees, origination fees , and application fees.

If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible's free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes.

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Fed's Williams says 2% inflation target 'critical'

The U.S. central bank's 2% target for inflation is key to achieving price stability and essential for ensuring economic prosperity, New York Federal Reserve Bank President John Williams said on Friday.

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