Late Night Taxis

[parliament]

I regularly work late (past 9pm), eat at the work place and then take a taxi home. Regularly means more than 60 journies in a tax year. I do this because work requires it.

My employer then reimburses me for the taxi and food. But I have to pay the tax on the taxi and food because it is considered a taxable benefit by HMRC.

I would like to write to my member of parliment to petition this aspect of tax law be changed because it is penalising me for working hard. I start at 9am and work to 1-2am when no public transport is available to get me home. I am posting here to seek the opinion of tax experts so I have a better understanding of the issues before going so far.

I think this question will apply to doctors, lawyers, bar workers and others who work late and regularly take a taxi home or eat at the place of work. My question is this -- other than taking in more tax, what is the logic of the HMRC with tax on late night taxis and late meals? It does not seem to make sense to penalise late or night workers.

[mullet]

Good luck, but I don't think you'll get anywhere with this. The main condition for the exemption for late night taxis is that the employee is required to work later than usual. If working into the small hours is a normal part of your job, then the exemption won't apply. See EIM21831 http://www.hmrc.gov.uk/manuals/eimanual/eim21831.htm.

The over-riding principle here is that the cost home to work travel is not deductible from employment income, except in certain circumstances. The same goes for a late meal allowance - if late working is normal, then there will be no tax-free allowance. You could take sandwiches, or the remains of yesterday's dinner to be microwaved. Or you could just pay for your food yourself.

[parliament]

Thanks mullet. I see the point on the food which is actually purchased and then consumed at the place of work. While a hot meal for dinner is nice, sandwiches it is.

Working into the small hours is more a function of the profession, it is hard to say what is normal. It's unpredictable, but there are times when there is a need to stay on and this may well exceed 60 times in a year.

The good news is that, "where all the late working conditions or failure of car sharing arrangements conditions are satisfied, the exemption will apply only to the first 60 such occasions. The fact that the 60 journey limit is exceeded in a tax year does not disqualify any of the first 60 such journeys from the exemption."

For the journey home, there is no alternative but taxis since public transport is not available at that time. I pay taxes to provide a pubic transportation system. After all the late working and car sharing conditions are satisfied, it seems perverse that the principle should apply without exception when employer and employee act to privately cover the journey even when it is more than 60 times in a year.

Odd the tax burden falls on the employee, because as the employee there is no other choice on how to get home and be in good shape for the next day of work, we're just doing what the employer requires. It certainly does not a feel like a benefit but rather an additional penalty. Is this unreasonable?

[Generix]

Not an expert in this field, but my (limited) understanding was that:

As poster above suggets; its related to working later than usual.

I.e. if you are a consultant and although your contract says something like "9-5, however may be required to work more hours on occassion" but in reality you are always working until 2am or something, then you would qualify for the expense not being a BIK.

However if you do, for example, night shifts, then you wouldn't qualify.

Q to experts in this field: Is my approach too simplistic?

[MrPAYE]

I was going to post on here the other day to tell the OP to stop his whingeing. No-one else gets tax relief to get to and from work so why should he just because it's later on in the day than most folk ??

Anyway, it appears that the OTS is going to be recommending that the relief for late night taxis should be withdrawn completely so will make the OP's point mute in any case if this goes through.

[parliament]

Hi Generix - not a tax expert but no, it’s not as simple as that. The consultant who is taking care of patients till 2am on an unpredictable basis only gets exemptions for the first 60 taxi journeys. In reality though it’s more often the junior and less well paid members of most professions who work the longer hours.

[parliament]

For everyone reading for information, on what the Office of Tax Simplification (OTS) is planning, the following links are helpful:

http://www.taxationweb.co.uk/tax-news/hmrc/office-of-tax-simplification-publishes-interim-report-on-tax-reliefs-that-may-be-axed.html

http://www.hm-treasury.gov.uk/d/ots_review_tax_reliefs_interim_report.pdf

It’s not a simple black and white matter because the issues are more nuanced and need thinking about to be fair.

Perhaps a further distinction is helpful. From 5pm to midnight public transport is still an option. I, and every colleague in this circumstance, think it’s quite fair that a late taxi is considered a benefit-in-kind just like a company car or employer provided food.
When unpredictable work demands push to somewhere between midnight (when public transport stops) to 6am (when public transport restarts) and there is no choice other than a taxi home, it does not look and feel like a benefit-in-kind.

The HMRC currently provides for this by allowing tax relief on the first 60 journeys.

“4.108 The policy rationale is that in specified circumstances, where an employee is required to work late and where public transport has ceased or it would be unreasonable for the employee to use public transport (e.g. because of the lack of reliability of the service), it would be unreasonable for the cost of an employer provided taxi to be treated as a benefit.”

The OTS is thinking about abolishing the relief because it looks like employers have the option, but not the legal obligation to pay the tax on late taxis for their employees through something called PAYE Settlement Agreements (“PSA”).

This aspect of abolishing the relief is worth thinking about further. If the employer does not pay the tax and NIC liability, the employee pays, in the latter case above (midnight-6am), unfairly. It is the employer after all that has obligated the employee to work so extraordinarily late (midnight-6am) versus a 9am-5pm contract on paper. The employee is not choosing to do so nor taking advantage of a “benefit”.
Addressing some of the features of the relief to improve fairness and reduce administration may well be a better course of action.