Finding effective ways to encourage your staff to get to work on time isn’t easy. Providing them with transport would surely help, but it’s likely to be costly. What tax incentives are there to reduce or even eliminate this expense?
Travelling to work by car is often stressful, putting your workers in a poor frame of mind before they start their day. To add insult to injury, the cost of getting there can make a big dent in their income. Public transport might be less traumatic but is often more costly and not practical if, for example, the nearest bus stop is a mile from your premises. One solution might be to provide your own transport. Although this sounds like something for big business, tax breaks plus a little ingenuity might make it viable.
On the buses
If there’s no nearby bus stop, you could consider subsidising a bus operator to add a stop (or increase the frequency of service to an existing one) within a sensible walking distance of your firm’s premises. In return, your employees would have free or reduced-rate tickets for using the service. The money they save, even though it’s at least partly funded by you, doesn’t count as a taxable benefit in kind.
The service must be used by your employees at least partly for any of the following qualifying journeys between:
- home and workplace (including journeys only completed partly by bus)
- workplaces (including journeys only completed partly by bus).
Tip. Your workers can use the bus service at other times for personal journeys and this won’t trigger a tax charge either.
Tip. You can recoup some or all of the cost of subsidising a bus route by having a salary sacrifice arrangement with your employees. This is where they give up some of their salary in exchange for a bus season ticket. Even where they reimburse you the full cost of the subsidy, they can be better off by 32% or more compared to paying for their ticket out of their wages (see The next step ).
Small firms can join in
Where a bus subsidy looks too costly even where your workers enter into a salary sacrifice arrangement, the scheme might still work.
Tip. Consider collaborating with other businesses in the vicinity to see whether you can afford the cost of a bus subsidy by clubbing together.
DIY bus scheme
In situations where the bus subsidy scheme isn’t suitable, there’s an alternative tax break that might work. Where you hire or buy a minibus with nine or more seats, and supply a driver, to collect your employees from a few pickup points en route to or from work, this won’t count as a taxable benefit for them. Naturally, the costs of running this service are tax deductible. You could also use the tip above to share costs with other businesses.
Tip. Another way to cover costs would be to hire out the minibus to other firms or organisations, say, at weekends. Although in this case you would have to pay tax on the money you receive.
If you want more tax or business tips, contact us today for more information.