As well as paying your employees a competitive salary, providing a good employee benefits package is also important. Employee travel benefits have been an important part of remuneration for many. But has this changed since the COVID-19 pandemic?
Why are employee benefits important?
Providing a good range of benefits to your employees shows that you are invested in them. A good benefits package can also help to attract top talent to your business and help you to retain it.
The health of your staff is important. Providing wellbeing benefits, such as dental, gym memberships and access to counselling, for example are seen, for many, as desirable additions. For employers, looking after the health of your staff can also mean fewer sick days, a happier and more productive workforce.
What are employee travel benefits?
Let’s face it. Travel can be expensive. And when it’s on travel to and from work, it’s even less appealing! Some of the most common employee travel benefits are:
- A company car
- Cycle to Work scheme
- A season ticket loan
But are there alternative travel benefits for employers to consider?
The residual effect of COVID-19
Many office-based workers started working from home in March 2020. A Transport for London’s Travel in London report, published in September 2020, found that rail and tube transport reduced drastically from 104% to 32%.
These numbers will rise again now that people are returning to offices, but some people will continue to work from home or use alternative transport. If that’s the case, will a loan to pay for train travel be as appealing?
A company car – Depending on the size of a business, not everyone will be offered a company car as part of their benefits package. For those that choose the option, it can be a tax efficient way of providing employee travel benefits.
Encouraging greater use of cars isn’t a very sustainable transport option for our planet, but there are opportunities to encourage electric cars.
Cycle to Work scheme – Introduced in 1999, the Cycle to Work scheme allows the cost of a bike and equipment to come out of an employee’s pay before tax. This means that the employee will pay less Income Tax and National Insurance and the employer will reduce their National Insurance Contributions bill.
As well as the financial benefits, it encourages staff to use a healthier and less polluting travel option. One thing we learnt from the pandemic is that maintaining a healthy weight and doing regular exercise is an important part of keeping healthy. So, offering staff a Cycle to Work scheme could now be more popular.
Alternative public transport – While fewer staff may be rushing to use the tube and busy trains again right now, perhaps offering subsidised local transport, such as buses would be preferred.
Tips for making travel benefits tax efficient
Employee benefits are a positive for your business, but making them tax efficient is important too. There is a host of information about which benefits are tax exempt, but it’s a good idea to speak to your accountant for advice which will be best suited to your business.
If you provide company cars and fuel to your employees, there will be National Insurance and reporting obligations. You’ll need to report the following to HMRC:
- Company cars used for private journeys.
- Cars adapted for an employee with a disability.
- Fuel for private journeys.
Company cars for private use, will also require you to:
- report on a P11D, and
- pay Class 1A National Insurance on the value of the car benefit.
Alternative public transport
Information on Gov.uk states that as an employer, you don’t have to report anything to HMRC if you’re contributing to subsidised or free public bus transport. You don’t have to pay any tax or National Insurance on these costs.
Remember, that when you look at the travel benefits you provide to employees, consider where your business is located and how much it could cost if take up is high. Take time to talk to your accountant about the tax implications of the benefits you provide.
Your accountant will be able to advise you on making your employee benefits tax efficient.
About Liz Cordell
I’m an experienced copywriter, with a great attention to detail. Having previously held positions at a global publisher, a top 100 law firm and a Big Four professional services firm, I now work with clients across a range of industries. Whether it’s new content for a website or creating interesting blogs for my clients, I can create engaging copy that doesn’t take a lifetime to read.