Are You Aware of Revenue’s Updated Publication on Travel and Subsistence Expenses?

From 1 April 2017, important changes to the regime for the tax-free payment or reimbursement of travel and subsistence expenses to employees and directors took effect. This is an area of focus for Revenue in PAYE audit scenarios, so employers need to ensure that they are complying with tax rules when approving travel and subsistence claims made by their employees.

Employers will need to take the following actions immediately in order to remain compliant from a PAYE perspective:

  1. Review their expense policies and systems and update them where required to ensure compliance with the revised rates;
  2. Communicate these changes to their employees, finance, payroll and HR teams.

The revised Standard Domestic Subsistence Rates are outlined below:

*effective from 1 April 2017

The overnight rates cover a business-related absence for a period of up to 24 hours, subject to conditions where the employee is working at least 100km away from their normal place of work or home (whichever is lesser).

The day allowance is payable to an employee working away from their normal place of work for over 5 hours and who are at least 8km away from that normal place of work or home (whichever is the lesser).

Vouched Accommodation Rate for Dublin

In recognition of difficulties in sourcing suitable accommodation in Dublin within the standard rate, a separate Vouched Accommodation (“VA”) rate may apply where employees or directors are claiming an overnight allowance in Dublin.

A Vouched Accommodation Rate consisting of the vouched (i.e. receipted) costs of accommodation up to a limit of the standard overnight rate of €133.73 plus the appropriate day rate for meals, may be claimed. The standard overnight rate will apply where employees or directors source accommodation and meals within the rate. Where accommodation cannot be sought with the limits of the overnight rate, they may claim the VA rate. 

Please see the VA rate below:

Foreign Subsistence Rates

Changes have been announced to the level of subsistence rates in relation to employees working outside Ireland. The new rates replace previous rates which have been in place since January 2010.

The rates of tax-free reimbursement depend on the location and duration of activities carried out abroad. A full schedule of rates can be obtained from your Mazars contact. 

Motor Travel Rates

The previous system of rates and mileage bands in place since January 1999 have been reviewed and updated in line with modern motoring needs and conditions. 

*effective from 1 April 2017

“Mixed Appointment” Employees

Revenue has also updated its Tax and Duty Manual 05-01-06 (“Tax Treatment of the reimbursement of Expenses of Travel and Subsistence to Office Holders and Employees”) to include a specific expense payment regime for “mixed appointment” employees. These are employees who fall partly within the term “travelling appointment” and partly within the term “site-based” employee.

A site-based employee is one who does not have a fixed base and who, in the course of their employment, performs substantive duties on behalf of their employer at different locations, e.g., employees in the building industry. In general, expenses of travel and subsistence known as ‘country money’ may be paid tax-free to a site-based employee where such employee is employed and working at a site which is 32km (20 miles) or more from the employer’s base.

An employee with a “travelling appointment” is one where either -

a) the employee is required to travel in the course of his/her job (e.g. travelling salesperson); or

b) travelling is an integral part of the employee’s job (e.g. bus driver, lorry driver etc.).

The reimbursement of expenses by the employer to an employee with a “travelling appointment” is, generally, only in relation to subsistence but may sometimes include expenses of travelling where an office holder or employee is required to use their own car on a business journey.

Where an employee holds a ‘travelling appointment’ for 75% or more of his or her workdays in a tax year and is site-based or otherwise engaged for the balance of the tax year, expenses of travel and subsistence may be reimbursed free of tax for the whole of the tax year as if the employee holds a ‘travelling appointment’ for the whole of that tax year.

This means that the employer’s premises or the employee’s home, whichever is closer to the temporary work location, may be treated as the base for the purposes of calculation of mileage and subsistence expenses. Also, country money may not be paid free of tax during any period where the employee is treated as holding a ‘travelling appointment’. This practice does not apply where the employee is site-based for 10 or more consecutive workdays. If so, the employee should be treated as a site-based employee during this period.

Where an employee holds a ‘travelling appointment’ for a period less than 75% of his or her workdays in a tax year and is site-based or otherwise engaged for the balance of the tax year, expenses of travel and subsistence may be reimbursed free of tax on the basis of:

a) holding a ‘travelling appointment’ in periods where the work comes within the description of the work of a ‘travelling appointment’, and

b) being a site-based employee in periods where the work comes within the description of the work of a “site-based” employee

Where an individual is in employment for a period of less than the whole of a tax year, the 75% apportionment should be applied for the relevant period of the employment.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please do not hesitate to contact a member of the Mazars employment tax team below:

Frank Greene (Tax Partner)  E:    T: (01) 449 6415
Ken Killoran (Tax Director)  E:   T: (01) 449 4451
John Kelly (Tax Manager)  E: T: (01) 449 4495

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