Changing Operations: Campus and Business Management Tax Benefits

1
Changing Operations Campus and Business
ManagementTax Benefits making the most of your
Travel Plan

• Stephen Potter
• Professor of Transport Strategy
• The Open University

2
Workshop Structure

• Presentation on current travel plan tax
  incentives, limitations and pitfalls (guidance
  note provided)
• Questions and discussion on above
• Report on on-going consultations and
  organisations involved
• Group session on using travel plan tax incentives
  and identifying reform priorities
• Feedback

3
Tax and Commuting

• Baseline is that any significant employer
  support to staff for commuting is treated as
  taxable income in kind
• Students are not employees so any travel plan
  benefits to students are not taxable
• Parking is an exemption and many travel plan
  measures are now also exempt from Income Tax and
  National Insurance Contributions (NICs)

4
Loans and Salary Sacrifice Schemes

• Interest-free loans to buy season tickets, a
  bicycle or anything legal
• up to 5,000 in any tax year.
• Salary Sacrifice can be used to purchase
  bicycles and bus tickets/passes
• The employee pays through a cut (sacrifice) in
  their pre-tax salary made up for by a payment by
  their employer so cuts out income tax and NICs
• Salary Sacrifice also used for pensions and child
  care, and HR departments are getting keen on this
  method

5
Buses

• Employer-provided works buses with 9 seats used
  for commuting are tax-free
• Employer-subsidies to public bus services to your
  site(s) are tax free - when there is a contract
  with the operator.
• Contracts with bus operators can include
  discounted or free fares for staff.
• But other ways to subsidise tickets are still
  taxable
• So you must subsidise in the right way to be tax
  efficient

6
Bicycle Exemptions

• The provision of bike parking, bicycles and
  bicycle safety equipment (e.g. helmets and
  lights) are exempt from tax.
• Cyclists breakfasts (unlimited from 2003) are tax
  exempt
• Bicycle maintenance, rescue services etc. ARE
  liable for tax

7
Other exemptions

• Alternative backup get-you-home transport for
  car sharers is tax-exempt (up to 60 trips a year)
• Insubstantial benefits - like freebies and small
  incentives/prizes
• Some employers have got bike doctor and rescue
  services agreed as insubstantial.

8
Taxable Travel Plan Incentives

• Payments to give up car parking rights
• Subsidies to train, tram or Tube fares
• Any substantial cash incentives
• Flexible schemes (vouchers, points Green Miles)
  need to be carefully designed.
• They could be taxable on the whole package if
  they contain a mix of taxable and tax exempt
  measures
• You could limit some measures to students only to
  avoid employee tax implications

9
Questions and discussion

• Points of clarification on existing concessions
• Any tips/warnings on using travel plan tax
  concessions
• Will cover lobbying for change next not now

10
Travel Planning and Taxation The movers and
shakers

• Transport Taxation Group
• Lobbying group containing environment/transport
  NGOs and researchers
• Supported by Campaign for Better Transport
  (formally Transport 2000)
• Had several successes
• Makes a pre-budget submission on
  transport/environmental taxation and has annual
  meeting with Treasury officials

11
Movers and shakers (2)

• National Business Travel Network
• Has a taxation group for user advice and supply
  evidence base to government (not lobbying)
• ACT Travelwise
• Network to promote travel planning and mobility
  management
• Department for Transport
• Sustainable Travel Branch (also commissioned
  research)
• Funds NBTN and provides support/contacts/links
• Green Fiscal Commission
• Macro study of eco-taxation reform
• Travel plans too detailed but could set agenda
  for important developments

12
Consultation and lobbying

• NBTN and DfT working on better information
  provision and uptake of tax concession measures
• Treasury/HMRC feels there is little use of
  existing tax concessions and reluctant to
  introduce more.
• NBTN organising survey on this
• New Government website will publicise tax
  concessions

13
Where we are at

• Extending concessions to train fares would
  involve a big tax loss for little gain.
• Tax concessions need to be clear and
  administratively simple (concessions that need
  enforcement checks and could be subject to
  dispute are out)
• Sorting some loose ends (e.g. bike maintenance
  and rescue services) would be helpful but
  further personal tax concessions may not now be
  the priority

14
Employee or employer tax incentives?

• Transport Taxation Group feels that employer tax
  incentives are needed otherwise employee tax
  concessions will not be offered
• To do with getting employers to take travel plans
  seriously a key issue
• Employers could have tax credit for specified
  travel plan expenditure
• Corporation Tax may not be best mechanism. A
  Business Rate rebate would affect all employers,
  but has not been used in this way before.

15
Group questions

• Which tax concessions are used by your
  university/organisation?
• Why are other tax concessions not used?
• Has tax been a barrier to the use or
  effectiveness of any of your travel plan
  measures?
• What tax change might get stronger support for a
  travel plan from your management?

16
Feedback on group discussion

• Headlines only keep it brief
• Tax concessions used (and tips)
• Why tax concessions are not used
• Any tax barriers
• Use of tax to get management support for a travel
  plan