CLASSIFICATION OF A JOURNEY

Whether you are running a fleet of light commercial vehicles, company cars or privately owned vehicles, every single journey that each vehicle makes can be considered to be for either a private or business purpose. For the most part, the classification of trips as either private or business is simple.

For example, an employee driving from the company office, or their own home, to visit a client would regarded as business travel and can therefore be financed without benefit taxation through the business. An employee using a company van to do their weekly shop or visit relatives is quite obviously private usage.

A journey from an employee's home address to the company office would generally be considered as ordinary commuting. Commuting is classified as private travel and therefore cannot be recorded or reclaimed as a travel expense.

 

COMMUTING - COMPLEX & CONFUSING

Companies and their employees experience most difficulties with commuting. Let's say that an architect travels from their home address to visit a client. On the way, they stop at their office to collect some blueprints for their client. Although a trip from a home address to an office is usually classified as private travel, in this case the visit to the office is incidental to overriding journey, therefore mileage allowance can be sought for the entire journey. However, if the office visit was not in relation to the client visit, or the architect was at the office for a significant period of time, they cannot seek mileage allowance for the initial part of the journey.

The architect employs builders. Although they spend long periods of time working on the sites of clients, these are classified as temporary workplaces and therefore mileage allowance can be claimed. However, if the builders travel from home to their employer's premises to construct timber frames in a workshop, despite them not spending significant periods of time on their employer's premises, this is considered to be a permanent place of work. Mileage relief cannot be claimed as travel is now considered to be commuting. Many businesses who run commercial fleets get caught out by this regulation.

ABAX recommends that time is taken to read and understand HMRC's guidelines on workplaces, commuting and expenses.