SE16070 - Vouchers and credit-tokens: transport vouchers - exemption for employees of passenger transport undertakings

Section 141(6) ICTA 1988

For a definition of a transport voucher see SE16060.

Transport vouchers provided for employees of “passenger transport undertakings” under arrangements in operation at 25 March 1982 are excluded from the vouchers charge. But there remains a tax charge under Part V Chapter II ICTA 1988 on directors and employees with emoluments at a rate of £8,500 a year or more ( SE20100 onwards). So the exclusion can only apply to employees earning at a rate less than £8,500 a year.

The exclusion covers passes, season tickets, etc which enable the employee, or a relation, to obtain passenger transport services provided by

• The employer
• A 100 per cent subsidiary of the employer
• A body corporate of which the employer is a 100 per cent subsidiary
• Another passenger transport undertaking.

Arrangements in operation on 25 March 1982 should be treated as continuing notwithstanding minor changes made after that date.

A “passenger transport undertaking” is defined as an undertaking whose business consists wholly or mainly in the carriage of passengers. For instance employees of a passenger bus company and its subsidiaries are thus, for example, exempt from this charge on free or cheap travel facilities provided for themselves and their relations by their employer or by another passenger transport undertaking (for example another bus company) under reciprocal arrangements.

For details of special rules for people who were employees of British Rail at the time of its privatisation in 1994 see SE16075.