The taxation of travel and subsistence expenses paid to employees, effective from April 6 this year has been reformed.

The Inland Revenue has agreed that normal commuting costs need not be deducted from journeys between home and a temporary place of employment and back again.

This means for example that if you live in Ilkley, and normally work in Bradford, but have to work temporarily in Wakefield for two weeks, the cost of your journey between home and Wakefield and back will be tax deductible. The effect of this is that your employer can fully reimburse your costs without having to pay any tax. Alternatively, if your employer operates a system whereby you are only reimbursed for extra costs, then you can claim tax relief for the full costs on your tax return.

There are other changes as well. If your work involves working away from home for long periods, then provided the original intention is that you will work away for a period of less than two years, all travel and subsistence costs will be tax free. Prior to April 6 1998 the limit is one year. This means that if, on April 6 1998, you are into month 13 or later of a period away (totalling less than two years), all travel and subsistence costs from that date will be tax free.

There is also good news for people with travelling appointments - those who work at many different sites each day, such as service engineers. Unless a depot is regularly visited, in which case home to the depot and back will be normal commuting, the whole of the travel costs will be tax free.

For more obscure points, you need to refer to the booklet; IR161, which is available from Tax Offices or consult your normal professional advisor.

Peter Meredith is a partner with Horwath Clark Whitehill

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