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Transport Schemes

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There are a number of transport-related benefit schemes that can be included as part of a comprehensive employee benefits package. The main options are:

 

 

Cycle-to-work schemes (salary sacrifice)

Another form of salary sacrifice that's growing in popularity is the Government's 'Cycle to Work' scheme. This allows an employee to sacrifice a proportion of their salary, usually for a fixed 12-month period, in return for a bike on day one.

The employee can then ride the bike to work, benefiting not only from the saving on fuel and parking charges, but also from the fact it's been paid for out of pre-taxed income. This means that not only are they not paying interest on a loan, they're effectively buying it tax-free. With VAT reclaimable on the purchase, the total cost of the bike can be around 50% less than if bought with taxed earnings. The maximum bike purchase is £5,000 under the scheme, although the employer can set their own limit.

Employers may wish to consider offering access to a cycle-to-work scheme through a voluntary benefits programme on a salary sacrifice basis. However, care must be taken to ensure that post-sacrifice salaries do not fall below the minimum wage.

Green travel-to-work schemes

The Government encourages employers to set up travel plans for employees by offering tax and national insurance concessions. A travel plan is a package of practical measures to reduce car use for commuting and business travel.

The following schemes can be provided free of tax or national insurance costs:

  • Free or subsidised work buses or minibuses
  • Subsidies for public bus services (but not trams or trains!)
  • Workplace parking for cars bikes and motorbikes
  • Season ticket loans – up to £5,000 p.a. These can also be operated on a salary sacrifice basis.

The concessions even extend to an employee who normally car shares but who has to go home early because of a domestic emergency! There will be no tax or NICs to pay if the circumstances could not have been anticipated or planned for.

Company cars

Company cars, along with pension scheme benefits, are often used to form the core of any benefits package. However, with increased taxation of car and fuel benefits, the "perk" has seen much of its value diminish.

Nevertheless, there are useful company car schemes that allow employees to enjoy the benefits of group purchasing/leasing of vehicles. These schemes may be offered by the major vehicle manufacturers on a direct basis or through the larger car leasing organisations, such as Lex and PHP.