Public transport

By Tolley in association with Philip Rutherford

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Public transport
  • Introduction
  • Season tickets
  • Subsidised or free public bus services


Employers may provide employees with assistance towards meeting the costs of public transport which the employee uses for commuting to and from their permanent place of work. The provision of the majority of these benefits have tax, NIC and reporting requirements which are discussed in turn below.

Season tickets

One of the most common forms of financial assistance that an employer provides to an employee is in relation to season tickets. There are a number of ways in which this assistance is provided and the tax, NIC and reporting consequences change with each of these.

Employer provides a loan for a season ticket

If an employer provides a loan to an employee to purchase a season ticket, there are no tax or NIC consequences, and no reporting obligations as long as the outstanding value of all loans to the employee is less than £10,000.

If the loans outstanding to the employee are greater than £10,000 then there are only tax and NIC consequences, and reporting requirements if the loan is provided at an interest rate lower than HMRC’s official rate of interest.

For further detail on the treatment of loans to employees, please see the Loans provided to employees guidance note.

If the employer writes off any part of the loan then he should include that amount in payroll and deduct both income tax and Class 1 NIC under PAYE.

More on Other commuting: