HMRC's interpretation of the employer travel rules for foreign workers appears to provide a limited scope for any workers who come to the UK on temporary work visas to obtain tax relief on the costs of living accommodation. Some foreign workers might well question that interpretation.

The UK is issuing temporary work visas to foreign nationals for up to 5,500 poultry workers and 4,700 HGV food drivers.

Temporary workers may wish to claim tax relief on the costs of living accommodation, this may be possible if the worker is engaged in a workplace that is temporary in nature according to the Employee Travel rules in s.339 Income Tax (Earnings and Pensions) Act (ITEPA) 2003. There are limitations in the rules which change this basic assumption.

Two aspects of the travel rules potentially affect foreign workers coming to the UK:

a) The temporary visa route for foreign nationals means that they enter the UK care of employment agencies. As agency workers, the Employment Intermediaries Travel expense rules (s.339A ITEPA 2003) trumps the other travel rules: each job undertaken by a worker personally providing their services through an employment agency is considered a separate employment for the purposes of travel and subsistence. This will mean that generally no relief will be given for home-to-work travel costs, associated subsistence or accommodation.

b). Alternatively, HMRC cites that under s.339 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003, foreign workers can be caught by the alternative rule in s.339 whereby the UK is seen as a workplace for a continuous period, for the worker. This overrules the 24-month rule and all work in the UK is treated as being at a permanent workplace. 

In summary, a Temporary Workplace is a place where:

  1. The employee goes to do a task that lasts for a short time or for some other temporary purpose.
  2. They spend less than 24 months working there.

There is a catch: if the employee is employed to work at one workplace during the course of an employment contract that will last less than 24 months, then the workplace where he is based is treated as a permanent workplace.

The Institute of Chartered Accountants in England and Wales (ICAEW), sought clarification of the rules for foreign work visa holders from HMRC and this led HMRC to cite s.339 to them rather than s.339A. We consider that if the worker takes more than one employment in their time in the UK and is not engaged only by an agency, that it will be possible to obtain tax relief under the temporary workplace rules because there will be more than one job and thus more than one temporary workplace. We find it curious that HMRC seems to regard the whole of the UK as a single workplace for any tryp of worker as clearly, this would impose a new restriction that has not yet been tested by the tribunals.

Useful guides on this topic

Travel (Employer guide)
This guide summarises the basic rules for employers to follow.

Subsistence (employer's guide
Subsistence is an expense that is normally incurred in conjunction with qualifying business travel or when staying away at a temporary workplace.

Accommodation: With travel or temporary workplaces
If an employee or any member of his family is provided with free or subsidised living accommodation by his employer a taxable benefit will arise unless...

External link

ICAEW Tax News


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