Season Ticket Loans - how do they work?

liz545 wrote: »

My OH has just started work at a company that's a longer commute than previously, so as part of his starting salary he asked them if they could arrange a season ticket loan, which they agreed to. On his payslips, the season ticket appears after tax has been deducted; I thought it was supposed to be deducted from his gross salary, thus reducing the taxable amount, but his work think it should be after tax. Does the deduction from net salary mean that he's not paying tax on the loan itself? And is it possible for the loan to be paid from gross salary?

Liz,

This treatment is correct. Your OH has been advanced a sum of money by his employer which he will repay from his AFTER tax salary. Usually. there is no tax advantage of a season ticket loan. There can be tax advantages of bigger loans (those classified as over £5,000) where the employee concerned will pay tax and NI on the cash equivalent of the benefit received.

Under the tax rule for employee loans if the total outstanding balance on all beneficial loans is £5,000 or less throughout the year of assessment, no tax is chargeable. I would presume that this would cover the case of your OH.

I hope this helps you,

MoneyMagician