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HMRC internal manual

Employment Income Manual

Vouchers and credit tokens: transport vouchers: travel cards: examples

For information on transport vouchers generally see EIM16060. For details regarding the tax treatment of travel cards see EIM16065.


Example 1

An employee is required to make a business journey from his workplace to visit a client and return to his workplace. The employee purchases a return train ticket at a cost of £10. Subsequently the employee submits a claim for expenses and is reimbursed £10 by his employer. The £10 is an expenses payment taxable under Section 70 ITEPA (EIM21600) but as the employee is entitled to a deduction under Section 362 (EIM16170) for £10, no charge arises to tax or NICs.

Example 2

An employer provides an employee with a weekly travel card because the employer knows that this employee has to make frequent business journeys. The weekly travel card costs the employer £25. Previously the employee’s expenses claims typically included train journeys costing £30 - £50 per week, so the employer considers it cost effective to provide the employee with a travel card instead of paying, or reimbursing the employee, for individual journeys. The travel card can be used during the week by the employee for private purposes as well.

During the week the employee keeps a record of his business journeys and at the end of the week he calculates the cost of those journeys at £30 in total, if paid singly.

The provision of a travel card represents a benefit to the employee but this benefit only results in a charge to tax and NICs if the private use of the card results in an additional cost to the employer in excess of the costs that relate to its use for business journeys. The employer incurs a cost of £25 to provide the travel card but if the employee had not been provided with a travel card, the cost to the employer for the employee’s business journeys would have been £30.

Consequently the cost to the employer in providing the travel card is less than the costs that would have been incurred on behalf of the employee for business travel if the employer had not provided a travel card. By choosing to provide a travel card the employer has saved £5.

The employee is provided with a benefit which cost £25, but he is entitled under s362 to a deduction for £25 (the deduction under s362 is capped at a maximum amount equal to the amount of the benefit, so the employee is entitled to a deduction for only £25, not £30). Any private travel using the travel card does not result in any further cost to the employer. Consequently there is no chargeable benefit to the employee.

Example 3

An employer provides an employee with a weekly travel card which costs £25. This employee spends most of his working time at his permanent workplace - he rarely travels on business journeys. The provision of the travel card represents a benefit to the employee who uses the card for private purposes, including ordinary commuting. During the week the employee visits one client, a business journey which is covered by his travel card, so he incurs no costs. If he had paid for a ticket for this journey the cost was £10. The employee is entitled to a deduction for £10 under s362 against the cost of the benefit of the travel card provided to him.