Companies May Deduct Taxi Price, But are Employees Taxed on it?

My employees are occasionally required to work late in the evening. If I pay for taxis to take them home is that cost tax allowable for the business and will the employees be charged tax on the taxi fare.

 

Where an employer pays for the travel costs of an employee for a journey between home and work (i.e. commuting), that cost would normally be a taxable benefit in kind for the employee. However, there is currently a particular tax exemption for late-night taxis used when it occurs irregularly, the employee is required to work later than usual and until at least 9 pm and at the time the employee finishes work either public transport was unavailable or it would be unreasonable to ask the employee to use it. It also applies where car-sharing arrangements have broken down. In these cases, the cost of the taxi is not taxable on the employee. But you can only use this tax exemption up to 60 times per year per employee. You need to keep accurate records of why each employee took a taxi to get home and the timing of those journeys.

This tax exemption for late-night taxis is due to be abolished from April 2012, so you may need to reconsider your employees’ travel arrangements in the future. The cost of taxi journeys for employees on business or to or from work will always be tax allowable for the business.

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