HELP FOR GREEN TRANSPORT

A package of measures to encourage green commuting and help cut red
tape for business will, from 6 April 1999:

- remove the employee benefits tax charge on

- works buses
- subsidies to public bus services
- bicycles and cycling safety equipment
- workplace parking for bicycles;

- introduce capital allowances and a tax free cycling allowance for
employees using their own bicycles on business travel; and

- allow employers to pay tax free for alternative transport when
car sharing arrangements temporarily break down.

These measures will encourage employers to establish green transport
plans and help employees travel to work without using their own cars.
Employers will also benefit from reduced paperwork as a result of the
removal of the tax charge.

DETAILS

1. Employees are generally taxable on benefits, including travel
benefits, which they receive by reason of their employment (although
some benefits, for instance, beneficial loans of #5,000 or less to
buy a season ticket, are already exempt from tax).

2. This means that where - for example, as part of a Green Transport
plan to encourage employees to get to and from work other than by
private car - an employer lays on a works bus for their home to work
journey, a tax charge can arise on the employees who use the travel
facility.

3. From 6 April 1999, there will be no tax charge on the following
green commuting benefits provided by employers:

(i) works buses with a seating capacity of 17 or more which are
used to bring employees to and from work

(ii) general subsidies to public bus services used by employees to
travel to work, provided the employees pay the same fare as
other members of the public

(iii) bicycles and cycling safety equipment made available for
employees to get between home and work

(iv) workplace parking for bicycles (and motorcycles).

In addition -

(v) employees who use their own bicycles for business travel will
be able to claim capital allowances on a proportion of the cost
of the bicycle.

(vi) An authorised tax free mileage rate of 12p per mile for
business cycling will apply. So employers can pay up to 12p per
mile to their employees tax free for using their own cycles on
business travel; and employees will be able to claim tax relief
on 12p per business mile if their employer provides no payment
(or be able to claim relief on the balance up to 12p per mile
if the employer pays less than this rate).

(vii) An existing Extra Statutory Concession (ESC A66) will be
extended - see Annex - to help employers promote car sharing
arrangements by their employees. This will allow employers to
pay tax free for alternative transport to get car sharers home
when exceptional circumstances, such as a domestic emergency,
mean that the normal car sharing arrangements unavoidably break
down.

NOTES FOR EDITORS

1. For employees earning more than #8,500 a year, benefits in kind
which they receive by reason of their employment are generally
taxable (along with their wages or salary). Otherwise it would be a
simple matter to avoid tax by arranging for employees to be paid in
non-cash form.

2. Tax relief has never been available for the cost of an employee's
journey to and from his or her permanent workplace. Where an employer
pays for that journey or provides facilities or equipment for it
(such as a works bus or a bicycle), the benefit is therefore
chargeable to tax.

3. The Government's White Paper on the future of transport, 'A New
Deal for Transport', notes that green transport plans can make a
major contribution to easing congestion. The exemptions now being
introduced by the Chancellor will help extend choice in transport and
secure mobility in a way that supports sustainable development.

4. Removing these tax charges will also have a beneficial effect on
business compliance burdens, because employers will no longer have to
calculate and report these benefits to the Inland Revenue on behalf
of their employees.

5. The cost to the Exchequer of this package of measures will be
about #5 million.

6. In addition to the new measures outlined above, there are two
existing tax provisions which employers establishing Green Transport
plans may find helpful:

(a) Beneficial loans exemption: loans on preferential terms to
employees do not give rise to a tax charge where the total loan(s)
outstanding is not more than #5,000. This enables employers to offer
interest-free or low interest loans to help employees buy a public
transport season ticket without the employee being faced with a tax
charge.

(b) For employees who may need to change clothes and to shower after
arriving at the office because, for example, they cycle or run to
work, tax is not chargeable on the free use by employees of changing
room and shower facilities at an employer's premises, provided these
facilities are generally available to all employees.

7. An extra statutory concession is a relaxation which gives
taxpayers a reduction of liability to which they are not entitled
under the strict letter of the law. Most concessions are made to deal
with what are, on the whole, minor or transitory anomalies under the
legislation and to meet cases of hardship at the margins of the code
where a statutory remedy would be difficult to devise or would run to
a length out of proportion to the intrinsic importance of the matter.

8. Inland Revenue extra statutory concessions are of general
application, but in a particular case there may be special
circumstances which must be taken into account in considering the
application of a concession. A concession will not be given in any
case where an attempt is made to use it for tax avoidance.

9. Details of current Inland Revenue concessions are published in a
free booklet, IR1, available from any Tax Enquiry Centre or Tax
Office. They are also available from the Inland Revenue Information
Centre, South West Wing, Bush House, Strand, London, WC2B 4RD. The
revised concession published today will be included in a later
edition of the booklet.

INLAND REVENUE PRESS OFFICE Media enquiries to: 0171 438
6692/6706/7327 (Out of hours: 0860 359544)

Non-media enquiries to: 0171 438 6420/6425 (Office hours only)

Inland Revenue information is on the Internet:
www.inlandrevenue.gov.uk

REVISED EXTRA STATUTORY CONCESSION A66

Payments for employees journeys home: late night travel and breakdown
in car sharing arrangements

Where an employer pays for an employee's journey between his
workplace and home, the cost to the employer is generally treated
under present law as a benefit to the employee and forms part of his
taxable income from the employment; no off-setting deduction would
normally be allowable under the Schedule E expenses rules.

Where, however:-

1. Late night journeys home

a. an employee is occasionally required to work late but those
occasions are not regular; and

b. by the time the employee can go home, either public transport
between the employee's workplace and home has ceased or it would
not be reasonable in the circumstances for the employer to expect
the employee to use it, the employee will not be charged income
tax on the cost of a taxi, hired car, or similar private transport
which the employer provides solely to take the employee home after
work on such occasions.

For the purposes of the concession

- a requirement to work late means working until 9pm or later;

- regular means a predictable pattern, for example if late night
transport is provided every Friday;

- circumstances in which, although public transport has not
ceased, it would not be reasonable for the employer to expect
the employee to use it to get home include circumstances where,
because of the low level of availability/reliability of services
at that time of night, a journey using public transport would be
likely to take much longer than a normal journey between work
and home.

2. Car sharing breakdowns

a. an employee travels to work under regular home to work car
sharing arrangements with other employees; but

b. the employee cannot on a particular occasion get home in the
shared car because of unforeseen and exceptional circumstances;
and

c. the employer pays for or provides the employee's journey home

the employee will not be charged income tax on the cost of the
journey.

Unforeseen and exceptional circumstances include circumstances
where the employee travels home at his normal time but, for
reasons beyond his control, he cannot travel in the shared car at
that time. They also include circumstances where the employee
expects to travel home at his normal time in the shared car and
the car travels at that time but in the event the employee needs
to travel home at a different time. They do not include
circumstances where, on any occasion, inability to travel home in
the shared car might reasonably have been anticipated

This concession applies to a maximum of 60 journeys in a tax year
(whether under (1) or (2), or a combination thereof).

# = pounds sterling