What are the regulations on travel expenses under different Sections of ITEPA related to ltd company formation UK

05 Oct

ITEPA which is abbreviated as Income Tax Earning and Pensions Act, contains regulations about different tax laws in UK. It discusses about different aspects like the acts related to employees in term of their wages or salaries (Section 62) or relations between earning and benefit codes (Section 64) etc. In this article, we will discuss about the employment benefit by keeping in view the travel expenses and cases related to it for a successful business registration UK. First we will discuss employment benefits case and then move forward to regulations relevant to travel expenses.

Mallalieu Case:

A barrister who wore special clothes in chambers and courts, demanded for the decrement in the cost of buying and cleaning clothes. The decision was made that the expense could not be decreased. A rule is that to determine if a thing was consumed merely for trade, then the thing purchased or the object is focused on. To check this rule, the commissioners decided to see the intention of taxpayer while spending to determine the object but they did not have a tapered approach to consider only her motive to decide her object although the motive was of great importance. Hence a conclusion was made that the determining factor could also be an unconscious object like normal routine clothing, and not only the conscious object that was to provide for professional purposes.

According to Lord Brightman, while spending, there should be a distinction between the effect of the expense and taxpayer’s object. The expenditure done can be solely for setting up a business UK, but it may also have a private benefit. However, the absence of a private benefit does not necessarily make the setting up a business UK expense distinct.

If a doctor visits his patient (also his friend) in Southern France for a week, and chooses to stay at his friend’s and examining him professionally.

He intends recovering the expense of the air ticket. Now the question arises whether the visit was merely considered a medical visit. The object of taxpayer will be considered in this regard for the decision. For this the question to answer is whether the visit is object itself or it is considered the effect of it. If the stay was not the doctor’s object, and the object was the checkup of patient, then the stay is considered to be an effect (unavoidable) of his visit’s expense.

It was then certain in this case to test the analogies. An example of nurse who is self-employed, gets a uniform for herself. This case is the one of degree and fact. The design and material of uniform is decided based on the nature of job and hygiene compulsion.

Other cases require for the self-employed person to get specially designed clothes to wear in the business meetings. For example, a waiter who is self-employed, requires wearing tails where the tails are vital for his trade’s equipment and it can be decided by the commissioners that the expense was merely for business purposes.

Lucas Case:

The example of a clerk is considered who required a phone at home that he installed soon after his employment and the payment for outgoing business calls were to be made by the employers but the payment of rent or installation were to be made by him alone. He demanded for the payment of rent and installation but it could not be done so since the charges were not under the reward of his duties as it could also be used for private calls.

Travel Expenses

Deduction in the case of employee paying cost as the employer’s holder if:

  • The expenditure is because of travelling due to the employment’s performance of duties
  • The expenses do not include those for private or ordinary travel

Section 337 on Employee’s Travel

After starting a company UK employer have to travel places for fulfilling its job obligation for the company. The Section 337 highlights the type of travel during the job and not travelling to job. For example, a kind of travel that an engineer performs to the customers’ houses to repair faulty machinery.

Section 338 on Employee’s Travel

‘Travelling in the performance of duties for attendance at the place of travel’

The place of travel can be a visit from home to client’s office or other such non-permanent places of work. The private travel is not included in this Section. The Section 338 is about the places where the employee travels for some work on temporary basis and not permanent work place.

Employee’s Travel – HMRC Guidance 490

In case if there is no permanent workplace for the employee, then his permanent workplace will be the range of area where he performs his duties. Such an employee receives some tax relief on the business registration UK travel’s expense and also the areas outside the business vicinity.

A person whose permanent workplace is his home, he is not entitled to any tax relief for the travel between his home and the company. However, if the main requirement of the employee’s job is to perform some of the work at home because of the availability of specific required facilities at home and not due to his own choice, then his home is the place where he travels to perform his duties and hence he is liable to the relief of tax.


Section 339 with having provision in Employee’s Travel

The expense of travel from home is not deductible in the case if the employees regularly travel to a place for performing their duties, then that work place is considered as permanent.


Travel Cases

Owen Case

A doctor who travelled to a hospital for part-time practice was permitted to subtract the travelling expenses as some duties of his job were done at his home as he directed treatment from home and the travelling was considered between two working centers. According to Lord Wilberforce, the doctor’s function and responsibility were in continuity and the expense could be subtracted in the case of proof of two work places.

To determine if the Expenses are exclusively, wholly and necessarily acquired, the orthodox rule is observed in Ricketts case. A barrister who was also a recorder in a province had to travel from London to that province. He demanded a deduction in the expenses acquired by him while travelling to that province from London. The case was observed and it was concluded that his travelling came under personal travel and it was not a performance of his duties and hence, his demand did not hold. His circumstances were created by him for his own ease and were due to his own violation.

According to Lord Blane burgh, the deductible expense was that from which all of the office’s participants could benefit. Even in case of a necessity, it should be one from an office work and not the employee’s personal situation. The case suggested that his travel was his own choice and convenience and hence, should not be considered a performance of his duty.


As according to Owen case, whether or not T’s option to live somewhere prevents the cost from being deductible: The orthodox rule is that in Ricketts case: a private option to live somewhere was incurred owing to the circumstances in reference to his workplace that personal to himself or are the consequence of his own volition.

Owen was distinct: ‘According to this case the hospital management committee needed the services of doctors on a part-time basis for emergencies: it had been found that there was problem in getting appropriate men. But for an acceptable doctor might be appointed the committee would need to appoint a doctor with an observing experience of his own and additionally with suitable medical specialty and anesthetic experience: he would possibly live and observe at intervals fifteen miles or one mile or a hundred yards of the hospital: the selection within the matter, if any exists, doesn't pair the doctor, who is there in his observe, however with the committee’.  Hence, the cost was deductible.

Taylor Case


Taylor was an expert within the production business. He was a Canadian subject and additionally a director of English breweries. He wasn't paid, however reimbursed expenses incurred within the performance of his duties. He accomplished them in Toronto, however the character of his work produced it necessary to form individual visits to breweries within the UK. It had been commanded that the travel expenses were essentially incurred between his 2 places of labor, needed by the terribly distinct nature of T’s employment.

Lord philosopher compared Owen and Ricketts case: ‘I suppose that the distinctive reality in Pook’s case was that there was a half time employment which it had been not possible for the leader to fill the post otherwise than by appointing a person with commitments that he wouldn't hand over. It had been so necessary that whoever was appointed ought to incur move expenses. I don't suppose that there was any departure from the quantitative relation in Ricketts case when deciding in favor of Dr. Owen’.


On the case: it had been not enough that the appellant narrowed to try and do the foremost of his add North American country, and wouldn't have taken the utilization otherwise. It had been not possible for the businesses that narrowed with him to induce the work done by anyone else. That I esteem the essential feature. That created it necessary that these move expenses ought to be incurred, which is what's needed to satisfy the rule.

It was highlighted that the proofs were superior as there was nobody else who may have stuffed the workplace in starting a company UK. The reasoning of Lord Philosopher was completely different thereto of Lord Morris and Lord Salmon. They commanded that the taxpayer’s duties were performed each within the UK and in North American country in order that there have been a minimum of 2 places of labor as in Owen Case.

Kirkwood Case


The remunerator opted to affix his company’s intended homeworking theme that caused him to travel at his expenditure once every week to his employer’s workplace. He demanded to deduct this. It had been command that though it had been a demand of the homeworking theme that he visit the workplace, the condition of such visits was determined by the taxpayer’s alternative of the place wherever he lived and not by the character and terms of his employment. Taylor Case is eminent: Taylor here wasn't unambiguously competent for the work.

Emerging rule from the cases: that whether or not the selection to measure during a place is of one’s personal volition, or ‘necessary’, depends on whether or not the leader had any alternative in hiring Taylor, and the way unambiguously suited he's for the duties of employment. In addition, the taxpayer’s travel among his home and his employer's workplace in city amounted to “ordinary commuting” since that workplace was a “permanent workplace” and not a “temporary workplace”.

ITEPA states that travel to and from work a brief job is so normal travel as a result of the locus in quo may be a “permanent workplace” at intervals paragraph four and not a brief one. The terms of the homeworking theme that he united needed him to attend the workplace in city on sooner or later per week. This group action was each regular and wasn't for the aim of activity a task of restricted period or for a few alternative temporary purpose. Though just one day every week, his group action at Leeds on that day was a permanent and continued a part of his duties as a worker. It existed for the whole length of his employment. His travel to and from city did so in my judgment quantity to usual commuting at intervals that means of Section 198.

Furthermore, meanwhile the homeworking theme was ex gratia and didn't need the remunerator to take care of a separate space in his home to figure in, the prices of heating and lighting the work house weren't incurred totally, solely and essentially within the performance of his duties however were equally owing to the upkeep of his home as such; which, consequently, the remunerator wasn't authorized to say the prices as deductible expenses.

Miners Case

The court commanded that though it's a main call that the duty is completed necessarily at home, the quantity won't be deductible if the duties may preferably be performed equally well somewhere else.

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