Defining Workplace Correctly Can Slash Your Tax Bill

Did you know that choosing your workplace location wisely could save you serious money in tax deductions? With more people working from home after COVID-19, understanding what counts as a “temporary workplace” can have huge implications for your wallet.

Why Does Defining a Workplace Matter?

Usually, your “permanent workplace” is clear—it’s the place you regularly go for your job. But now, many workers split their time between home and office or travel to temporary sites. This new flexibility has created questions about when you can claim travel expenses as tax-deductible.

Here are the big issues you need to understand clearly:

• Temporary workplace expenses: What exactly qualifies?
• Travel between workplaces: Can you claim expenses?
• Ordinary commuting: What does HMRC say is “ordinary” commuting, and why can’t you claim these expenses?

The Power of a Temporary Workplace

HMRC (the tax authority) allows you to claim travel expenses if you work from a place they classify as “temporary.” According to HMRC, a temporary workplace is somewhere you go to do your job for a short-term assignment or limited duration. For example, if your usual office is in Birmingham but you have to work in London for one year, this London office counts as temporary. This is excellent news because all your travel expenses between home and London can be claimed as tax-deductible!

But there’s a crucial catch: the “24-month rule.”

What’s the 24-Month Rule?

This Rule is essential to understanding whether you can claim expenses. HMRC states that if you work continuously at a place for more than 24 months, it’s no longer temporary—it becomes your permanent workplace. This means you can’t claim travel expenses anymore.

So, how does HMRC define “continuous work”? But, if you spend 40% or more of your working time at a particular workplace, it counts as significant and, therefore, continuous. Once you hit the 24-month mark or expect to reach it, this workplace becomes permanent, and travel between home and work becomes “ordinary commuting.” Unfortunately, ordinary commuting doesn’t qualify for tax deductions.

What if You’re Not Sure How Long You’ll Be There?

Sometimes, you might not know how long a job at a different location will last. If it’s initially uncertain or expected to be under 24 months, good news—you can still claim expenses! However, the moment you expect your assignment to last 24 months or more, the location immediately becomes a permanent workplace, and your travel expenses can’t be claimed anymore.

Changing Expectations: What Happens Then?

What if the length of your assignment changes unexpectedly? This is where things get interesting—and complicated. HMRC offers this example:

Imagine you’ve worked for your employer for ten years, and you’re assigned to a new workplace for 28 months. Because the assignment is initially longer than 24 months, this new place counts as permanent from day one, and you can’t claim any travel expenses.

But after ten months, your employer shortens the assignment to just 18 months. What now? Here’s the surprising twist: You still can’t claim travel expenses for the first ten months because it was initially expected to exceed 24 months. However, for the final eight months, you can now claim expenses because the workplace is now classified as temporary.

What About Working from Home?

Working from home might sound like the ultimate solution—but beware! While technically, your home could be your permanent workplace, allowing you to claim travel costs to your office, HMRC usually disagrees. They view home office work as a personal choice rather than a business requirement, which means they typically won’t allow you to claim expenses related to working from home.

Maximise Your Tax Savings

Here’s how you can use this knowledge to save money:

1. Understand clearly whether your workplace qualifies as temporary or permanent.
2. Track how long you spend at each workplace to see if you stay under that critical 24-month threshold.
3. Regularly review expectations for each job assignment so you know immediately if the situation changes.

Why Acting Now Matters

With flexible working here to stay, knowing how to classify your workplace can be the difference between paying more tax than necessary or keeping more money in your pocket.

Don’t miss out on valuable tax relief—define your temporary workplace correctly and start saving today!