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AIA

Tax breaks for employee travel in a time of terrorist attacks

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28th Jul 2005
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Sales of bicycles in the City have rocketed in the wake of the July 7th bombings and further disruption unfortunately remains a distinct possiblity. But there is a silver lining to these events, if only a very small one.

The phrase 'healthy body, heathly mind' is actually spot on. Exercise can relieve stress, depression and is good for your heart, lungs and circulation. Now is the ideal time for employers to review their employee travel arrangements, and for the short time of year when the sun is supposed to shine, make use of the tax breaks available for alternative transport.

S.244 ITEPA 'Cycles and cyclist's safety equipment' provides that there is no liabilty to tax under the benefits code when the following conditions are met:
* There is no transfer of property in the cycle or equipment in question, and
* the employee uses the cycle or equipment in question mainly for qualifying journeys, which includes home to work travel, and
* cycles are available generally to employees of the employer concerned, or as the case may be, cyclists' safety equipment is so available to them.

The bicycle can be later gifted to the employee in question. The taxable benefit will then be under s.206 ITEPA 2003, the market value at the date of the gift.

Employees with their own cycles may of course claim AMPs at a rate of 20p per mile for business travel. This does not include home to work travel unless there is a 'home working requirement'. In the event of a lasting terrorist campaign in London, some employees may well be pressing for a change in their work place.

Parking of a car, motorcycle or cycle s.237 ITEPA 2003 at or near the workplace is an additional perk. Cycle security being a major consideration.

A works bus is another option for employers who are stuck trying to shift employees to and from work. Under s.242 ITEPA 2003 there is no taxable benefit providing that the bus seats at least nine people, which may include the employees' children. Whether or not this is a practical option is dependent upon the availibily of such transport for hire.

Finally, ECS A58 could possibly be extended if the terrorists are not aprehended and HMRC are feeling reasonable. This consession provides that an employer may reimbuse employees for the extra costs of travel and subsistence caused by public transport disruption. It extends to employer provided accommodation, a company bus and the provision of hire cars. The type of 'disruption' normally means strikes or other industrial action.

Nichola Ross Martin FCA

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