Tax measures promote green commuter schemes

A package of seven tax measures introduced in UK Chancellor Gordon Brown's annual budget are intended to promote green commuter schemes and increase funding for rural buses from £100 million to £120 million.

The measures to be introduced from 6 April 1999:

  will remove the employee benefits tax charge on works buses; subsidies to public bus services; bicycles and cycling safety equipment; and workplace parking for bicycles.

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

  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.

Employees are generally taxable on benefits, including travel benefits, which they receive by reason of their employment. 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.

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

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

  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

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

  workplace parking for bicycles (and motorcycles)

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. 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).

An existing Extra Statutory Concession (ESC A66) will be extended 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 breakdown.

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