Employees regularly working from home should be allowed to claim against tax the cost of travelling to the office, tax experts said.
They are urging the government to respond to changes in work habits driven by the pandemic, with many workers continuing to work from home even when their offices have fully reopened.
The Chartered Institute of Taxation, the professional advisers’ body, this week urged ministers to review the tax rules on travel costs to and from their employer’s premises where the employees worked part-time at home. These costs should be tax-deductible, like current business travel expenses, the institute said.
Such a move would be a break with current tax regulations under which travel to and from a main workplace is regarded as commuting and the personal responsibility of the worker. This is treated differently from business travel, when employees travel to places other than their main place of work, for example for a client meeting.
But the tax institute argues that when a worker’s home becomes their main workplace, the situation changes.
“Tax rules need urgent updating to reflect the reality of hybrid working,” said John Hood, a tax partner at Moore Kingston Smith, an accountancy firm.
“As employers restructure their real estate and reduce expensive desk space, working at least partly from home may even become a condition of employment. But the tax system has some serious catching up to do. HMRC’s interpretation of a workplace is stuck in the 1950s.”
The Treasury said employees were already entitled to tax relief on costs “necessarily incurred” during their duties. It added that all taxes were kept under review.
It plans to end temporary pandemic-linked concessions at the close of the 2021-22 tax year next April. These include allowing employers to pay workers £6 weekly tax-free for the extra costs of working from home, such as heating. Where people working from home do not receive such a contribution, they have been able to claim £6 a week in tax relief. There is no travel allowance.
The government is broadly keen to encourage workers back into offices to revive city centre economies. Most big employers agree. But many workers have come to prefer working from home at least some of the time.