Due to globalization, more and more UK residents are working overseas for short periods of time. The opportunities associated with these often result in career growth, but as you can imagine, so do the financial and tax complexities. Temporary Workplace Relief (TWR) is one of the critical tax reliefs available to UK based expats working abroad. You can maximise your financial benefits and drastically reduce your tax burden by using this relief correctly. In this guide, we go into the nitty gritty of TWR, eligibility criteria, and how UK expats can make the most of this.
What is Expat Temporary Workplace Relief (TWR)?
Temporary Workplace Relief is a tax benefit that allows employees to work out of their regular place of business on temporary assignments. This enables people to claim deductions on expenses incurred in the performance of work-related duties at ‘temporary’ locations.
HMRC in the UK defines a temporary workplace as a place where an employee works for up to 24 months. Assignments beyond this period are called permanent assignments and the employee would not be eligible for TWR.
For expats, this relief can cover expenses such as:
Flights, train tickets, car mileage
Spending on accommodation (e.g., rent, Hotel stays).
Subsistence costs (meals while working).
TWR’s primary purpose is to stop employees from being taxed unfairly on reasonable expenses incurred in performing essential work in locations other than their normal place of work.
Why Does Temporary Workplace Relief Matter to UK Expats?
A significant percentage of UK residents work abroad on temporary or short term assignments such as being involved in an international project, participating in an extended training course or being in the subsidiary office. Without TWR, expats could face double taxation: They pay tax on their UK income and cover much of the out of pocket costs abroad.
Beyond this, TWR minimizes these financial burdens and ensures compliance with UK tax laws allowing individuals to avoid penalties for incorrectly reporting expenses.
Temporary Workplace Relief Eligibility Criteria
TWR isn’t automatic and there are specific criteria to be met. Below are the main eligibility requirements:
The work must be performed at a temporary workplace for less than 24 months.
If your assignment lasts over two years, HMRC may decide that your permanent place of work is in that location and could no longer qualify you for TWR.
Your work performed at the temporary location must be directly related to your job duties.
Your routine commuting or personal travel is not included.
During the assignment, you must maintain UK tax residency status. This means meeting the Statutory Residence Test (SRT) requirements.
If you work in several locations, your temporary workplace should not exceed 40% of your total working time in 24 months.
Claiming Temporary Workplace Relief
TWR claiming is also far from straightforward and requires precise documentation with guidance from HMRC. Here’s a step-by-step guide to simplify the process:
Save receipts, invoices, and bank statement from all the relevant expenses.
Document any travel log and dates, locations and reasons for travelling to support any claim.
Only include work-related costs in your claim.
Use HMRC-approved mileage and subsistence rates for consistency.
Use HMRC’s self assessment tax return form to declare expenses under the relevant sections.
Be willing to break down costs for transparency.
Review with a qualified accountant your claim to make sure that it complies with UK tax laws, and don’t make mistakes that can lead to penalties.
Common Challenges And Misconceptions
Most expats misinterpret TWR and make wrong claims or spurn opportunities. Here are some common pitfalls:
1. Failing to Understand the 24-Month Rule
Although some expats believe that TWR applies regardless of assignment length, TWR is not always applicable. However, claims are disqualified when you remain in the same location for more than 24 months.
2. Claiming Personal Expenses
TWR does not cover expenses that are unrelated to work, i.e. e.g. leisure travel or family visits.
3. Neglecting Documentation
If you don’t keep sufficient records, you can be rejected for a claim or audited by HMRC.
4. Assuming Automatic Relief
TWR is not applied automatically. It is up to you to claim it through HMRC or your employer.
Temporary Workplace Relief and Its Financial Benefits
When utilized correctly, TWR offers significant advantages:
1. Reduced Taxable Income
Expenses that are eligible will be deducted, which means you will pay less in taxes.
2. Improved Financial Stability
You can control your living cost better with more disposable income during your temporary assignment.
3. Compliance with Tax Laws
Correctly claiming TWR means you comply with UK tax law and cut your risk of penalties or fines.
Why Seek Professional Help?
TWR as well as other expat tax provisions can be daunting to navigate. Tax laws change constantly, and even a small mistake in your claim can result in penalties, or you lose out on savings. If you work with experienced tax accountants, you can be sure that your claim is accurate, comprehensive and compliant.
Getting professional tax accountants advice helps you optimise your overall financial strategy. For instance, accountants can provide you with situation-specific advice that goes beyond TWR and can alert you to additional tax-saving provisions that might be applicable.
Conclusion
Temporary Workplace Relief is a useful tax saving tool for UK expats, but has to be carefully planned and well documented. It is important to know what is and isn’t eligible, the best expenses to claim, and to seek professional tax accountants guidance if you intend to maximize this benefit.
If you’re one of the hundreds of thousands of UK expats who work in a country outside the UK, you’ll know that the area of tax relief can be confusing and prone to errors.
Contact us today and find out how we can help you claim Expat Temporary Workplace Relief and maximize your tax savings.