SE23778 - Car fuel benefit: fares allowances paid under Working Rule Agreements in the building, civil engineering and electrical contracting industries

Problems sometimes arise with fares allowances paid under Working Rule agreements for hourly- paid manual workers and similar agreements for staff employees.

Fares allowances paid under these agreements effectively reimburse employees for various travelling expenses. The agreements differ but the allowances often cover most of the cost of ordinary commuting journeys.

Only part of the allowance is taxed. This is usually based on the allowance paid for an agreed mileage from the home which is treated as being ordinary commuting. Thus, for each employee, part of the allowance covering home to work travel may be taxed and part may not.

If an employer meets the cost of supplying fuel used in a provided car by paying a travel allowance to a director or an employee within Part V Chapter II ICTA88 the full amount of the car fuel benefit charge applies unless

• the allowance does no more than cover the cost of fuel used for business travel, or
• that part of the "fares allowance" covering private use is "made good" to the employer.

Use the Schedule E expenses rule in Section 198 ICTA 1988 to test the extent of business travel (see SE31805 onwards). The mere fact that part of a "fares allowance" covering home to work trips is not taxed does not mean that those journeys count as business travel.

2003/04 onwards

The car fuel benefit has a different basis for these years. See the contents page at EIM23700.