Taxi reimbursements will cost employers more under rule changes

Workers claiming taxi journeys back as expenses will often cost their employers more in tax under planned rule changes.

HM Revenue & Customs is to set out guidance qualifying exactly when a taxi journey can be counted as tax-free to employers.

Taxis can only be counted as tax-free where an employee is working unusually late, beyond 9pm and when they could not reasonably be expected to use public transport.

Customs guidance is now to rule out many reasons for not using public transport, including being tired, and carrying a heavy briefcase.

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Graham Farquhar, partner for employer services at professional services firm Ernst & Young, said: “This tightening of interpretation is a quantum leap from the previous guidance, which only provided an example of a taxi every Friday as not being irregular.

“The new guidance clarifies HMRC’s view on how to measure irregularity, which is likely to put a large administrative burden on employers as they will now have to make subjective judgments with little certainty they have got it right.”