Travel costs from home to a distant workplace

These days employees can be more and more flexible about where they can live and work.

Usually the cost of travel from home to work is treated as an employee’s private expense.It reflects their personal choice as to their home location. If an employer does pay the employee for these travel costs, the amount is subject to PAYE in the same way as other wage/salary payments are. (The situation is slightly different if the employer actually provides or pays for the travel directly - in this case tax is still payable, but by way of the employer paying fringe benefit tax.).

However, things can change where an employer pays for travel from the employee’s home to a distant workplace (ie somewhere that is not within reasonable daily travelling distance of the employee's home). There are situations where this type of payment is not taxable (one example is if it relates to a temporary posting or secondment of up to two years). The IRD is currently in the process of reviewing this area and the deadline for feedback is 6 September 2019.

Each specific situation needs to be looked at in detail, so please call us if you have any questions. In the meantime we await the results of the IRD's review.

If you want to talk through your own situation please contact us at Bradley Accounting.