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Date of publication: January 2012

Overview:

An employee of an overseas company who attends a temporary workplace in the UK for a period of up to 24 months may be able to obtain relief for the cost of travel to and from that workplace, accommodation and subsistence attributable to attendance at that workplace. This guide helps explain the rules and measures in place to deal with this situation.

Continuation of employment:

In order to claim relief the secondment must be part of the duties of continuing employment rather than the commencement of a new employment. So the relief is ideal for existing staff of an overseas company who can be seconded to the UK operation for a period which is not expected to exceed 24 months. The existing contract of employment with the overseas employer is still maintained and the expectation is that the employee will return to the overseas employer after the period of secondment.

Timeframe of secondment:

Once it has been established that the secondment constitutes continuing employment, relief can only be obtained if it is expected that the employees' duties in the UK will last no longer than 24 months. If at any point during this 24 month period the expectation changes, such that the duration of stay is likely to exceed 24 months, the tax relief is lost from the date of the change in expectation- not from the end of the 24 month period.

Business travel relief:

If the above conditions are satisfied then the costs of all business travel associated with the secondment including reasonable subsistence and accommodation costs are allowable expenses, in full, against the employees income, or if paid for by the employer, are not taxable as earnings or benefits of the employee.

What constitutes "reasonable cost" is likely to reflect the seniority of the employee. The relief given is sometimes restricted if the accommodation is also provided to other family members.

Round sum allowances:

In some situations round sum allowances for employees' accommodation and subsistence are granted by employers. As long as these allowances are not excessive then the payment can be made free of PAYE and Class 1 NIC. However it must be included on a Form P11D and the employee is allowed relief for the amount actually spent. It is preferable, if some what more administratively burdensome, to pay or to refund specific receipted expenses.

Subsistence:

As well as accommodation an employee on secondment can also obtain relief for all additional subsistence costs attributable to the secondment. This covers food, and may also cover costs associated with accommodation such as utility bills. Relief may also be available for travel between the temporary accommodation and temporary workplace. In addition, personal expenditure incidental to the business travel of £5 a night (£10 outside the UK) is allowable.

The employee must keep all records of expenditure to support the tax relief claim.