Deductions Help Please

Treadmill

In my new job I get a season ticket loan for the train, I believe this is taken out of my salary before deductions, I'm not hot with figures so I was hoping some kind soul could help me make a decision, I have two choices of season ticket, the express train which is £4182 Per year and the slow train which is £3290, I'm trying to work out the difference in my take home pay if I choose one or the other.

My basic salary is £37357 and I get paid 4 weekly, the loan will be deducted from my pay in 10 monthly instalments, I'm under 60, Married, Not Blind or a Widow (obviously lol) My tax code is 657L (I launder my own uniform hence the the extra £100.) My Pension is 11.56% + an additional £130 Per year year top up pension, I pay union subs of £168 per year

I'd like to know the difference in take home so I can make a decision on whether the convienience is worth the extra money every four weeks.

Apologies as this is not strictly about tax saving but I know there are some helpful knowledgable people on here

Thanks

Pumpkinface_2

I think it should be taken out of your pay after deductions, as travel to work is not allowable for tax purposes.

Treadmill

A season ticket loan for a train is I believe, as is a car park loan to allow you to use the train, its some sort of enviroment initiative.

Pumpkinface_2

No, they can offer you a free or low interest loan for your season ticket without you having to pay tax on the benefit in kind of a free / interest free loan; but there should not be any other tax advantage i.e. the repayments should be from pay after deductions.

http://www.hmrc.gov.uk/green-transport/travel-plans.htm

Treadmill

"Employers can offer their employees a free or low-interest season ticket loan up to £5,000 per year. There is no tax or NICs to pay provided the full amount of the loan is repaid to the employer and total loans outstanding do not exceed £5,000 at any time."

From that link, am I getting confused here ?

Rolo_Tomasi

I seem to recall a public transport incentive was introduced a few years ago in which employers can offer their employees a free season ticket loan with is no tax or NICs to pay provided the full amount of the loan is repaid to the employer. I have not heard that this has been abolished however with this governments continuous tweeking of tax rules it may have been.

Even so the repayments should still come out of your net salary - I do not think there is any tax relief due on them.

LucyTheDwarf

You're misunderstanding. Were the balance of the loan over £5K it would be treated as a taxable benefit - you'd be taxed on the interest that you haven't paid, if I remember rightly. The deductions will still be made from your salary post tax and NI, otherwise you'd be in effect getting a tax relief twice - on the loan and on the cost of the season ticket.

Pumpkinface_2

Ok, so say you are getting a loan from your employer of up to £5,000k for your season ticket interest free. You would not be able to go to the high street and ask a financial insitution to provide you with a £5k interest free loan, they might charge you say £200 interest, thus your employer by providing the interest free loan, is providing you a £200 "benefit in kind".

The legislation is saying that you will not be taxed on the £200 benefit in kind.

It is not saying that your repayments of the £5,000 can be deducted from your gross income. This should be paid from net income, whatever your employer lends you, you repay in full from your net pay.

Treadmill

I see that makes it easier to work out then, if its taken out of net, I can work that out on my fingers lol

Treadmill

Still struggling with net after the loan though, anyone ?

Pumpkinface_2

Well if you borrow £4,182 and take the fast train your net pay will be reduced by 4182 / 12. If you borrow £3,290 and take the slow train your pay will be reduced by 3290 / 12.