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HMRC internal manual

Employment Income Manual

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

Section 86 ITEPA 2003

For a definition of a transport voucher see EIM16060.

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 taxable benefit under Part 3 Chapter 10 ITEPA 2003 on employees other than for employees who are in lower paid employment (see EIM20007) for 2015/16 and earlier. So the exclusion can only apply to employees in lower paid employment for 2015/16 and earlier.

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

  • the employer
  • a 100% subsidiary of the employer
  • a body corporate of which the employer is a 100% 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 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 EIM16075.