Local buses - new guidance
As an employer you can help your local bus services to get your employees to work on time. This support is free of tax and NIC if it falls within the HMRC guidelines, which have recently been clarified.
Examples of acceptable bus service support include working with the bus company or local authority to provide additional bus stops, or agreeing bus timetables that suit your workers’ shift times. Alternatively you can subsidise certain bus routes so your employees get free or discounted journeys. You could also pay for season tickets for a specific bus route. But the taxman draws the line at free bus journeys provided by means of a bulk purchase of tickets, or zonal or regional tickets which allow travel on many bus routes.
The cost of season tickets for particular bus routes may be incorporated into a salary sacrifice arrangement. If you have used a salary sacrifice arrangements to pay for zonal or regional bus tickets for your employees, you need to change those arrangements or accept that there will be tax charges.
Where the salary sacrifice for a zonal or regional ticket was in place before 30 April 2013, that arrangement can continue to the end of the employee’s bus pass agreement, if that falls within 12 months. Any renewal of bus pass arrangements must meet the new clarified conditions for the tax exemption.
