Relocation Allowance - taxable or not?

[punkypossum]

Where are the experts on here? As a lot of you know, we moved offices a couple of months ago and for the first couple of years in the new place, we were told we could claim the difference in distance by providing vat receipts for petrol, bus tickets or signing some form to say we cycled in.

It's only 8 miles, so it's not an enourmous amount of money that can be claimed back, but I was still hoping it would make a difference... However (despite a manager saying in the consultation meetings it wouldn't be taxable), it now turns out we are getting taxed on what we get back - which means I lost more than half of it and ended up with an extra £10 in my pay packet which doesn't even cover the 5 occasions I had to take the bus last month.

Nobody seems to know where we stand (no union presence either), trawling the intranet reveals that if it was business travel (i.e. going for meetings, on courses, etc.) it wouldn't be taxable, but relocation allowances aren't mentioned at all. A look at the inland revenue website confuses things further stating that 6 conditions have to be fulfilled for it not to be taxed, but they only appear to list 4....

Does anybody know the legalities of that? Surely there is not much point in providing a VAT receipt if it gets taxed anyway? I know it's not a massive amount of money, but with my income, it does make a difference and people taking cars are hit even harder.

Any ideas?

(I do realise the obvious solution would appear to contact HR, but they seem to regularly forget there is an H in HR and only rembember the R)

 

[ChrisKH]

All home to work travel, if paid for, is taxable. Certain exeptions, but essentially that's the case. Your provision of a tax receipt only helps the employer claim it as an expense against tax, it doesn't validate your expense as not taxable. Sounds like to me that your employer was offering this as an incentive and someone has ****ed up. Very possibly they have now realised the error of their ways or have had a Payroll audit by HM Revenue & Customs and been found out. What am I talking about? They're preparing P11 d's for 08/09 and realised they have messed up.

Go back to your employer and say they are contractually bound to pay the tax. They promised after all. They can then pay this via a PAYE (Pay As You Earn) Settlement Agreement, meaning employees do not need to pay anything. If a manager said it wasn't taxable and you relied on his/her word and now there is tax to pay, the employer is liable. You have to push the point that they said there was no tax to pay and stand your ground.

 

[punkypossum]

Hmm...just read the instruction on the p11d mentioned by Lee, but again it only mentions business miles, which for some reason, our travel to work is not classed as... From what I did gather from the intranet, only miles travelled for business (meetings, working from a different office that's not your normal place of work, etc.) fall under this. Which is why, when we had to travel to the new place for training but weren't yet officially based there, we got it back tax-free.

Edit: Ooops, just read CKH's post, which seems to unfortunately confirm that...

 

[ChrisKH]

It does all sit on whether they promised it was tax-free. They may have made a mistake but that's not really your problem. Depends how far you want to push it with them and whether there is any safety in numbers, i.e. more than one person affected, then a polite group request to them to re-think their position and pay the tax given their original proposal was accepted on the basis of it being tax-free. If you don't think it's possible and you value your job then I'm afraid you are going to have to swallow it. Very poor actions on their part though and it certainly won't help employee relations, however big or small they are.

Good luck.