This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Employment Income Manual

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

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

Oyster cards

Oyster cards are different from other travel cards because they can be used in one of three ways, or in any combination of the three, as follows -

  • as a travel card,
  • as a bus pass/season ticket,
  • to add travel value (cash) on a pay as you go basis, or

any combination of the above.

The main distinction between an Oyster card and other travel cards lies in the facility to add cash value to the Oyster card for travel, on a pay as you go basis.

If an employer provides an oyster card to an employee and adds £25 cash value to the card for future use, the consequences are no different from an employer which provides an employee with a travel card costing £25. Consequently the tax treatment of cash value added to an Oyster card provided by an employer to an employee depends, as with travel cards generally (EIM16066), on the nature of the use by the employee of the Oyster card.

The employee may hold an Oyster card in his/her own name. It is used for personal and business travel. If the employer gives the employee £25 per week to place value on the card in order to give the equivalent of, say, five daily travel cards, the award of £25 is a taxable expense but the employee is entitled to a deduction in respect of the cost of actual business travel. If the number of daily business journeys is equal to or greater than the cost of a daily travel card, the taxable expense is covered by a matching deduction. No tax or NICs arises on the payment to the employee.