What is temporary workplace relief and how to maximise tax efficiencies for employees

Employers navigating short-term international assignments understand the intricate web of considerations, including travel, accommodation, and subsistence expenses. One crucial aspect of an employee’s package revolves around assignment-related benefits, expenses, and employer costs. Achieving tax efficiency in these areas can significantly reduce overall costs for international assignments. In this post, we’ll delve into the concept of Temporary Workplace Relief, exploring what it entails, its tax benefits, and the conditions that must be met to qualify.

Understanding temporary workplace relief

When employees are temporarily seconded away from their regular workplace for up to 24 months, under UK tax rules they become eligible for tax relief on expenses related to travel and accommodation at the temporary workplace. This relief, aptly named Temporary Workplace Relief, allows employees to claim tax deductions for incurred expenses or employers to cover costs, such as accommodation, utilities, daily meals, and travel potentially tax free. Notably, there’s no upper limit on the amounts that can be claimed tax-free, provided the costs are reasonable and supported by evidence. It’s crucial to note that the relief only applies to costs incurred by the employee and does not extend to accompanying family members.

What conditions should be met

For the assignment to qualify for Temporary Workplace Relief, it must meet specific conditions:
The employee must be seconded to a workplace away from their regular place of work while maintaining an ongoing employment relationship with their home country employer.

The assignment should be planned to last no longer than 24 months. This duration is determined based on reasonable expectations and factors such as the anticipated duration of any project to which the employee is seconded.
Eligible costs must be both incurred and reasonable, emphasising the importance of documenting expenses.

Temporary Workplace Relief provides employers with the opportunity to offer tax-free benefits and expenses to their employees on secondment, enhancing the overall compensation package. For companies which don’t usually provide assignment-related benefits, the potential tax savings on personal liabilities in the UK make short-term secondments more appealing for individual employees.

Conclusion

In conclusion, leveraging Temporary Workplace Relief not only helps in containing tax costs but also enhances the overall attractiveness of short-term international assignments for both employers and employees.

Navigating the complexity of what constitutes a temporary workplace is crucial, especially for short-term secondments, and our team is here to assist in reviewing compensation packages and assignment documentation, preparing tax projections and estimating tax savings.  Get in touch if you want to learn more about the intricacies of maximising tax efficiency in your international assignments.