Travel & Subsistence Rules: Overseas Travel

Q. I work as a contractor in UK but I am not a UK resident yet. I work through an umbrella (as an employee) and due to last Travel and Accomodation Allowance changes I’m not allowed to claim overseas travel expenses anymore (I fly home every weekend). I wonder if this new rules apply when you live overseas and work temporary in UK. If I am not wrong, one become a resident when it stays at a permanent address for at least 183 days.

A. The special rules for travelling expenses for non-UK resident individuals are contained in separate legislation (sections 373-375 ITEPA 2003) to the travel & subsistence rules (section 339A ITEPA 2003) & therefore appear to be unchanged. However, an employee who:

• is not domiciled in the UK but who works in the UK
• not resident in the UK in either of the 2 years before the tax year of their arrival in the UK or was not in the UK at any time during the 2 years immediately preceding their arrival

is entitled to tax relief under the special rules for 5 years from the date they came to the UK:

• for the full cost of journeys from the place where the employee usually lives to the place where they are working in the UK and back home after carrying out those duties – the requirement that the journey must be to a place in the UK to perform duties of the employment can be taken to mean travel to the place where the employee lives in the UK whilst performing the duties of the employment – there is no limit to the number of journeys for which an employee can get tax relief
• if the employee’s work in the UK keeps them in this country for 60 days or more – for the cost of a spouse or civil partner and children travelling from their home to visit or accompany the employee to the place where they are working in the UK, and their return journey

The employee can only get tax relief for up to 2 outbound journeys and 2 return journeys in each tax year for each member of their family but only if the costs are paid or reimbursed by their employer. You should therefore confirm the position with your Umbrella provider as to how these expenses have been treated.

The tax treatment of a non-resident’s UK earnings depends on the length of their visit. Where they do not remain long enough to be classed as resident they are nonetheless liable to UK tax on UK earnings although these are sometimes exempt under the provisions of a double tax treaty.