Tax Benefits in Business Travel Plans: Maximizing Your Savings

1. Changing Operations: Campus and Business ManagementTax Benefits – making the most of your Travel Plan Stephen Potter Professor of Transport Strategy The Open University

2. Workshop Structure • Presentation on current travel plan tax incentives, limitations and pitfalls(guidance note provided) • Questions and discussion on above • Report on on-going consultations and organisations involved • Group session on using travel plan tax incentives and identifying reform priorities • Feedback

3. Tax and Commuting • Baseline is that any significant employer support to staff for commuting is treated as taxable ‘income in kind’ • Students are not employees so any travel plan benefits to students are not taxable • Parking is an exemption and many travel plan measures are now also exempt from Income Tax and National Insurance Contributions (NICs)

4. Loans and Salary Sacrifice Schemes • Interest-free loans to buy season tickets, a bicycle or anything legal • up to £5,000 in any tax year. • ‘Salary Sacrifice’ can be used to purchase bicycles and bus tickets/passes • The employee pays through a cut (‘sacrifice’) in their pre-tax salary made up for by a payment by their employer – so cuts out income tax and NICs • Salary Sacrifice also used for pensions and child care, and HR departments are getting keen on this method

5. Buses • Employer-provided works buses with 9+ seats used for commuting are tax-free • Employer-subsidies to public bus services to your site(s) are tax free - when there is a contract with the operator. • Contracts with bus operators can include discounted or free fares for staff. • But other ways to subsidise tickets are still taxable • So you must subsidise in the right way to be tax efficient

6. Bicycle Exemptions • The provision of bike parking, bicycles and bicycle safety equipment (e.g. helmets and lights) are exempt from tax. • Cyclists breakfasts (unlimited from 2003) are tax exempt • Bicycle maintenance, rescue services etc. ARE liable for tax

7. Other exemptions • Alternative backup ‘get-you-home’ transport for car sharers is tax-exempt (up to 60 trips a year) • Insubstantial benefits - like freebies and small incentives/prizes • Some employers have got bike doctor and rescue services agreed as ‘insubstantial’.

8. Taxable Travel Plan Incentives • Payments to give up car parking rights • Subsidies to train, tram or Tube fares • Any substantial cash incentives • Flexible schemes (vouchers, points ‘Green Miles’) need to be carefully designed…. • They could be taxable on the whole package if they contain a mix of taxable and tax exempt measures • You could limit some measures to students only to avoid employee tax implications

9. Questions and discussion • Points of clarification on existing concessions • Any tips/warnings on using travel plan tax concessions • Will cover lobbying for change next – not now

10. Transport Taxation Group Lobbying group containing environment/transport NGOs and researchers Supported by Campaign for Better Transport (formally Transport 2000) Had several successes Makes a pre-budget submission on transport/environmental taxation and has annual meeting with Treasury officials Travel Planning and Taxation – The movers and shakers

11. Movers and shakers (2) • National Business Travel Network • Has a taxation group – for user advice and supply ‘evidence base’ to government (not lobbying) • ACT Travelwise • Network to promote travel planning and mobility management • Department for Transport • Sustainable Travel Branch (also commissioned research) • Funds NBTN and provides support/contacts/links • Green Fiscal Commission • Macro study of eco-taxation reform • Travel plans too detailed – but could set agenda for important developments

12. Consultation and lobbying • NBTN and DfT working on better information provision and uptake of tax concession measures • Treasury/HMRC feels there is little use of existing tax concessions and reluctant to introduce more. • NBTN organising survey on this • New Government website will publicise tax concessions

13. Where we are at… • Extending concessions to train fares would involve a big tax loss for little gain. • Tax concessions need to be clear and administratively simple (concessions that need enforcement checks and could be subject to dispute are out) • Sorting some loose ends (e.g. bike maintenance and rescue services) would be helpful – but further personal tax concessions may not now be the priority

14. Employee or employer tax incentives? • Transport Taxation Group feels that employer tax incentives are needed otherwise employee tax concessions will not be offered • To do with getting employers to take travel plans seriously – a key issue • Employers could have tax credit for specified travel plan expenditure • Corporation Tax may not be best mechanism. A Business Rate rebate would affect all employers, but has not been used in this way before.

15. Group questions • Which tax concessions are used by your university/organisation? • Why are other tax concessions not used? • Has tax been a barrier to the use or effectiveness of any of your travel plan measures? • What tax change might get stronger support for a travel plan from your management?

16. Feedback on group discussion Headlines only – keep it brief • Tax concessions used (and tips) • Why tax concessions are not used • Any tax barriers • Use of tax to get management support for a travel plan