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Help needed - employee travel loans!

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I've been offered a job in another City which I'll have to commute to on the train every day. My new company have confirmed that they operate a travel load scheme but haven't really told me much else.

They want me to hand my notice in to my current employer no later than Friday (21st) and have suggested that I raise the travel loan issue in my telephone interview with HR tomorrow, but this obviously doesn't given them a lot of time if my notice is going in on Friday and I'm not handing notice in until this is cleared up.

An annual Season ticket costs £3,100.00. Can anyone advise if this would be classed as taxable income? What concerns me is my current employer pays £3,100.00 into my wages, the government take roughly 1/3 leaving me to make up a £1,000.00 shortfall which I can't afford.

I really know nothing about this kind of thing, can anyone fill me in??
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  • System
    System Posts: 178,344 Community Admin
    10,000 Posts Photogenic Name Dropper
    This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com
  • CTA_2
    CTA_2 Posts: 120 Forumite
    I've been offered a job in another City which I'll have to commute to on the train every day. My new company have confirmed that they operate a travel load scheme but haven't really told me much else.

    They want me to hand my notice in to my current employer no later than Friday (21st) and have suggested that I raise the travel loan issue in my telephone interview with HR tomorrow, but this obviously doesn't given them a lot of time if my notice is going in on Friday and I'm not handing notice in until this is cleared up.

    An annual Season ticket costs £3,100.00. Can anyone advise if this would be classed as taxable income? What concerns me is my current employer pays £3,100.00 into my wages, the government take roughly 1/3 leaving me to make up a £1,000.00 shortfall which I can't afford.

    I really know nothing about this kind of thing, can anyone fill me in??

    I am not sure the third paragraph is particularly clear...

    But, if you have a loan this is not classed as taxable income. You may be taxed if you have a "cheap" (interest free usually) loan.

    However, any cumulative loans under £5,000 from employment are not classed as "cheap" loans and therefore there is no income tax issues arising.
    DISCLAIMER - Whilst I am a qualified and practicing CTA any advice i provide should not be relied upon as i have no possibility of confirming individual circumstances. Any advice i provide is merely a guide and provided in my free time.
  • CTA wrote: »
    I am not sure the third paragraph is particularly clear...

    But, if you have a loan this is not classed as taxable income. You may be taxed if you have a "cheap" (interest free usually) loan.

    However, any cumulative loans under £5,000 from employment are not classed as "cheap" loans and therefore there is no income tax issues arising.

    Sorry if I wasn't clear.

    My annual rail ticket would cost £3,100.00. So, are you saying that they loan me the £3,100.00 which I pay back monthly, and because it's under the £5,000.00 it doesn't get taxed?
  • cord123
    cord123 Posts: 644 Forumite
    I had this and it doesnt get taxed. XX
  • cord123 wrote: »
    I had this and it doesnt get taxed. XX

    If that's correct that's great news as my I've been assuming I'd have to pay some sort of tax. Means more money in my pocket!!
  • John_Pierpoint
    John_Pierpoint Posts: 8,401 Forumite
    Part of the Furniture 1,000 Posts
    edited 18 September 2012 at 4:50AM
    In my day such loans were called "advance against salary".
    The loan was in the form of a cheque payable to the train/bus company and its repayment appeared in the pay slip as a deduction from pay after tax.

    I believe that in Paris such costs are tax free?
  • CTA_2
    CTA_2 Posts: 120 Forumite
    Sorry if I wasn't clear.

    My annual rail ticket would cost £3,100.00. So, are you saying that they loan me the £3,100.00 which I pay back monthly, and because it's under the £5,000.00 it doesn't get taxed?

    If you have no other loans from employment then yes, no tax liability.
    DISCLAIMER - Whilst I am a qualified and practicing CTA any advice i provide should not be relied upon as i have no possibility of confirming individual circumstances. Any advice i provide is merely a guide and provided in my free time.
  • John_Pierpoint
    John_Pierpoint Posts: 8,401 Forumite
    Part of the Furniture 1,000 Posts
    edited 18 September 2012 at 7:41PM
    It is the interest that you are not paying that won't be taxed (as Alice said to the Cheshire cat?).

    You cannot be paid tax free for commuting to work.

    The following exception came about, because there was a huge fuss on the behalf of the employees of Boots the Chemist (now one of the better know UK tax avoiders).
    Boots ran something akin to a free private bus service in Nottingham to gets its army of workers to and from work.

    You pay for subsidised or free public bus transport

    Definitions or restrictions

    You pay a subsidy to a bus operator (or to a body such as a public transport authority, which then distributes the money to a bus operator) to help finance a local public bus service that is potentially useful to your employees. For example, a bus route that stops outside your workplace gate. In return, your employees get free or reduced-rate transport on the supported route.
    The service is used by your employees at least partly for any of the following 'qualifying journeys':
    • between home and workplace (including journeys only completed partly by bus)
    • between workplaces (including journeys only completed partly by bus)
    What to report, what to pay

    Provided the above conditions are met you have:
    • no reporting requirements
    • no tax or NICs to pay
  • antonic
    antonic Posts: 1,978 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    If that's correct that's great news as my I've been assuming I'd have to pay some sort of tax. Means more money in my pocket!!

    I work for the Civil Service and each year get an interest free loan, from my employer, to purchase my annual travel pass.

    This years the cost was between £1152.00, which was paid to me as a lump sum and I repay @ £96.00.mth - and as others have said there are NO tax implications for me.
  • I had a £800 interest free loan from my employer for travel and had my tax code adjusted accordingly. Was this incorrect?

    Argh wait just realised this was in addition to a preferential interest rate on my mortgage (via employer) which most definitely is taxable. I'm guess therefore that as the mortgage + travel loan is far more than £5000 the whole lot is taxed.
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