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The Government recently introduced a number of targeted tax exemptions to assist employers wishing to set up a travel plan. A travel plan, for the uninitiated, is a package of practical measures put together by an employer to reduce its employees' car use for journeys to and from work. Normally, when an employer provides money or benefits for things like the costs of petrol or season tickets, for employees to get to and from work, these benefits are taxable.
The Government recently introduced a number of targeted tax exemptions to assist employers wishing to set up a travel plan. A travel plan, for the uninitiated, is a package of practical measures put together by an employer to reduce its employees' car use for journeys to and from work. Normally, when an employer provides money or benefits for things like the costs of petrol or season tickets, for employees to get to and from work, these benefits are taxable. However, to make travel plans more effective, there are a number of items that are now exempt from tax and National Insurance contributions charges. These include:
* free or subsidised works buses;
* subsidies to public bus services;
* bicycles and safety equipment made available for employees;
* workplace parking for bicycles and motorcycles.
Draft regulations have been drawn up, made under a power to exempt only minor benefits, to add two further exemptions that employers have asked for so as to further enhance existing travel plans measures.
Exemption of six cyclists' breakfasts per year
Some employers designate a few days a year as 'cycle to work' days, and provide with a free breakfast the employees who try cycling to work. Strictly speaking, such meals are currently a taxable benefit in kind. To ensure that there is no bar in the tax system that discourages cycling to work, the regulations exempt up to six cyclists breakfasts a year. Presumably where there are more than six cyclists who receive breakfast, the employer will have to introduce a 'breakfast lottery' to see which lucky cyclists will not have to pay tax on their free breakfast.
The exemption is in addition to the existing tax and National Insurance exemption that allows an employer to provide bicycles or cycling safety equipment for employees for travel to and from work. An employee can also use the cycles for leisure rides as long as it is used mainly for commuting to work. Expect a visit from the Revenue cycle Inspector to ensure that this rule is adhered to …
Exemption of lunchtime use of a works bus
As a result of representations from employers, particularly in out of town estates, that they would like to be able to offer their employees occasional lunchtime shopping trips in the works bus, draft regulations have been introduced to make such trips tax and National Insurance exempt.
Comments on these draft regulations should be sent by the end of October to: Julia Vinall, Room 106, New Wing, Somerset House, The Strand, London WC2R 1LB, e-mail: julia.vinall@ir.gsi.gov.uk.
Retail prices index
The value of the retail prices index for August 2001 is 174.0.
