Tax & Accounting News

Reclaiming Transport Costs

26/11/2009

Where an employee incurs travel costs in the course of their work, they have always been able to reclaim the amount concerned on expenses, provided the travel was to a temporary workplace and was necessary in the performance of their duties.

However, the situation has become slightly more complicated in recent years, owing to the increased use of travel cards which provide unlimited travel during a certain period. It may be that the purchase of such a card is the most economical option, but neither the employee nor employer incurs a cost on any individual journeys, as costs are covered by the travel card.

The travel card is a benefit in kind to the employee but as the employee and employer do not incur individual journey costs, it would seem a benefit would arise on the employee.

Fortunately, the rules allow for a deduction equal to the lesser of the total cost of the journeys made for business purposes if they had been paid for singly, or the cost of the travel card. Therefore the employee is not penalised because they or their employer chose the best-value method of paying for travel, but nor is it possible to ‘profit’ from the arrangement.

If an employer provides a travel card to enable the employee to travel for private purposes, including normal commuting, the employee is provided with a benefit in the form of a transport voucher. The cash equivalent of the benefit is the cost of the travel card, minus any part of the cost paid by the employee.

For more information please contact us.