Tax considerations of a tube strike
Growing up in and around London you pick up on your local public transport links very quickly. You also learn that whilst the timetable says the bus or tube journey will take 15 minutes, it is likely to be closer to 45 as 1 TFL minute usually translates to 3 earth minutes. But, as you have no other means of getting about, you suffer it and factor that into your journey time. Who wants an extra half an hour in bed in the morning anyway?
However, times change and I decided to move away from London. I plumped for Suffolk, loaded the van and set off to my new life in the countryside.
All sounds very nice so far, until I turn on the iPad whilst sat on my train, check the BBC news website and am greeted by the two words every commuter fears: TUBE STRIKE!
Frustration turns to anger. How will I get to work? Should I drive in? Could I cab it part of the way? How many buses will I need to take if I go down that route and how long would that take? Could I possibly work from home?
This got me thinking. Depending on my decision, there could be potential tax consequences to consider.
If I did travel in to work and had to take a cab part of the way due to the lack of tubes, I’d be incurring additional costs that I couldn’t do anything about. Normal commuting costs are not tax deductible, so I’d just be out of pocket as a result. Even if I drove in, at a considerably greater cost, it wouldn’t be classed as business travel so I’d get no relief for the petrol costs I’d incur. I could take a bus/buses, but that may mean I need to get up before the sun does to get to work on time. Stuff that, I’ll work from home.
Working from home has several benefits. The first of which is the avoidance of time wasted travelling. No need to set the alarm for 6am today, I’ll get up at 8am. I’ll be “home” by 5.15pm as well, rather than the usual 7pm. There’s also no need to wear a suit and tie today, although tracksuit bottoms will always be a no-no in my house. One has to have standards.
With my beloved coffee machine and laptop fired up I’m primed and ready to start work at 9.15am.
I’m liking the sound of this working from home malarkey I hear you say, but there are costs to you personally for doing so.
You’ll potentially be:
- using electricity, gas and internet allowances that you normally wouldn’t have, had you been in the office;
- using your own phone rather than the office phone;
- raiding the fridge every half an hour and watching your Nespresso capsules diminish at an alarming rate.
Whilst there’s nothing we can do for your love of caffeine and fridge snacks, there are claims to be made for the other costs you have incurred that have enabled you to work from home. Identifying these can, however, be tricky. Although the examples I’ve used here are rather minor, other expenditure incurred in the year can be much more substantial, and how these are treated needs careful consideration.
HMRC’s guidance on what constitutes allowable business expenditure is far from brief. Their “Booklet 490” on Employee Travel alone runs to 76 pages and the legislation surrounding the use of cars, both company and privately owned, and other expenditure is vast.
When you have finally got to an expense figure, do you claim these expenses back from work? Do you claim for them personally on your Tax Return? Can the company claim for them? Will benefit forms P11D be required? Should dispensation claims be made to HMRC?
As you can see, there’s a lot to be thinking about and a lot of this may not be obvious at first glance. If you’d like us to look at your current arrangements, with a view to making things more tax efficient, please do get in touch.Talk to Barnes Roffe today