Train Season Ticket as Employment Benefit

eye.liff

Hi there,
does anyone know if its possible for your employer to buy your train ticket for you out of your gross salary, thereby avoiding tax on that amount? The only way I can find is if your workplace is defined as your home and you need to travel to the office to get to work 3 days a week. My contract is for my head (sole) office and my employer is concerned about the legality of changing my contract to make me home based to exploit this loophole..
Surely there must be an easier way?

All pointers appreciated,
Cheers
Richard

skintandscared_2

If there was a legal way to do this, I think most City firms would do it. The usual method is for the firm to give the employee an interest-free loan for the value of the ticket and take monthly payments from their salary. It's obviously cheaper than buying monthly tickets that way. But unfortunately the monthly deduction is taken AFTER tax, not before.

PS, where does the "loophole" exist that gives you a tax-free season ticket if you usually work from home?

xylophone

Could it be done via an arrangement/salary sacrifice similar to these?http://www.stagecoachbus.com/uploads/salaryschemelowresformat.pdf
http://www.merseyrail.org/media/135956/Corporate%20Season%20Ticket%20Scheme%20FAQs.pdf

p00hsticks

eye.liff wrote: »

Hi there,
does anyone know if its possible for your employer to buy your train ticket for you out of your gross salary, thereby avoiding tax on that amount? The only way I can find is if your workplace is defined as your home and you need to travel to the office to get to work 3 days a week. My contract is for my head (sole) office and my employer is concerned about the legality of changing my contract to make me home based to exploit this loophole..
Surely there must be an easier way?

All pointers appreciated,
Cheers
Richard

You're probably better off posting on the Cutting Tax board - this one is really for social security type benefits

http://forums.moneysavingexpert.com/forumdisplay.php?f=22

Wher are you actually working day to day ? I genuinely work from home and my employer reimburses me my train fare in full as expenses on the rare occasions I have to travel into an office, but if I was office based I'm pretty sure this would count as a benefit in kind in the same way as them giving you company care would.

skintandscared_2

xylophone wrote: »

Could it be done via an arrangement/salary sacrifice similar to these?http://www.stagecoachbus.com/uploads/salaryschemelowresformat.pdf
http://www.merseyrail.org/media/135956/Corporate%20Season%20Ticket%20Scheme%20FAQs.pdf

The Merseyrail scheme is similar to the one I mentioned above. The company buys an annual ticket and takes the cost in 12 equal instalments from your salary, saving a couple of months' worth of fares.

The stagecoachbus one appears to be just for employees of companies directly connected with the bus services - not for companies generally?

"Where employers provide financial or other support to public bus services, employers can provide season tickets to their employees for use on the bus services free of tax and National Insurance (“NIC”), providing certain conditions are met."

I have asked about salary sacrifice before but been told that is not something that can be done for work travel (except for a cycle scheme, which won't be much good for me getting from Dartford to the City every day :rotfl: ).

xylophone

http://www.accountingweb.co.uk/anyanswers/season-ticket-loan-salary-sacrifice might be of interest?

skintandscared_2

xylophone wrote: »

http://www.accountingweb.co.uk/anyanswers/season-ticket-loan-salary-sacrifice might be of interest?

and after going through the registration process, they conclude that no, it doesn't work aside from a possible NIC benefit. I have worked for a lot of firms in London who offer season ticket loans and salary sacrifice benefits for things like childcare vouchers, but none have ever offered the season ticket loan as salary sacrifice.

I'm still intrigued by the OP's suggested "loophole" of saying he works from home and asking his employer to commit fraud by clearly falsifying his contract to say this. I understand their reluctance!

WestonDave

Its never going to work - think about it! If HMRC looks at it, they are going to wonder why someone is home based is being given a rail season ticket which enables them to get into an office location every day - thereby effectively proving that you are office based! Its not just a question of the letter of the wording of how you set this up - HMRC will look at the practical reality and if it looks dodgy, will go after you for it leaving you struggling to prove its not. "Innocent until proven guilty" doesn't apply very well to HMRC issuing tax assessments and chasing them up!

seven-day-weekend

I was wondering why someone working from home needs a season ticket to get to work?

CKhalvashi

seven-day-weekend wrote: »

I was wondering why someone working from home needs a season ticket to get to work?

I genuinely work in London for 50% of my week, but coincidentally also work in Switzerland for 90 days a year, plus 2 weeks in a second country (This year was Sweden, next year is Denmark), plus 10 days in a third country (This year is Ukraine, next year is TBC).

This is a little different, in the way that it's not commuting and genuinely is for the purpose of completing two contracts.

I think that HMRC have the rule, that generally if it's for more than 2 years and is regular, then it's not allowed. This is the view from day one, if the contract will probably last for two years.

There is no way around this (unless you're non-dom and have foreign income, which is how my tax liabilities are structured)

CK