Following consultation with the entertainment industry and licensed trades, HM Revenue and Customs (HMRC) have issued revised guidance regarding the tax position on taxi journeys paid for by employers for staff who work late at night.
Taxis have routinely been provided for female staff so that they can get home safely, but this led to issues regarding whether a taxable benefit in kind arises as, under the normal tax rules, any journey to or from work paid for by the employer is part of the employee’s remuneration and thus taxable.
A relaxation for night workers was introduced in 2003. This made the cost of late night taxi rides provided for employees tax-exempt. HMRC’s new guidelines indicate what conditions they will expect to be fulfilled for such payments to continue to be tax free.
The conditions are that the four ‘late working conditions’ must be satisfied. These are:
- the employee is required to work later than usual and until at least 9 pm; and
- this occurs irregularly; and
- by the time the employee ceases work either public transport has ceased or it would not be reasonable to expect the employee to use public transport; and
- the transport is by taxi or similar road transport.
All of these conditions must be satisfied for the exemption to apply.
Additionally, the exemption applies only for the first 60 such journeys made by the employee in any tax year.
For more information, see http://www.hmrc.gov.uk/manuals/eimanual/EIM21831.htm.