As an employer covering your employees’ public transport costs, you have certain tax, National Insurance and reporting obligations. What’s included Public transport costs include: season tickets provided for employees season ticket costs reimbursed to employees loans made to employees to buy season tickets contributions to subsidised or free public bus transport

You don’t have to report anything to HM Revenue and Customs ( HMRC ) if you’re contributing to subsidised or free public bus transport. You don’t have to pay any tax or National Insurance on these costs. An example would be when you help finance a bus route that gives your employees free or reduced-rate transport between their homes and work or between workplaces. Salary sacrifice arrangements You do have to report your employees’ public transport costs if they are a part of a salary sacrifice arrangement.

What to report and pay

If the public transport costs aren’t exempt , you may have to report them to HM Revenue and Customs ( HMRC ), and deduct and pay tax and National Insurance. Season tickets provided for employees This also includes any other public transport vouchers you provide to employees. You must: report the cost on form P11D add the full cost to their earnings and deduct Class 1 National Insurance (but not PAYE tax) through payroll Season ticket costs reimbursed to employees This covers arrangements where your employee buys their own season ticket but you reimburse them or cover their costs with an allowance or salary increase. This counts as earnings, so you’ll need to: add the cost to your employee’s other earnings deduct and pay PAYE tax and Class 1 National Insurance through payroll Loans made to employees to buy season tickets You should treat this as you would any other loan made to an employee . Salary sacrifice arrangements If the public transport costs you pay are less than the amount of salary given up, report the salary amount instead. These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change .

The following guides contain more detailed information: employment income: season tickets provided; liability to tax Class 1 National Insurance: earnings of employees and office holders: season tickets particular benefits: exemption for subsidies for public bus services

Expenses and benefits: public transport

Overview

As an employer covering your employees’ public transport costs, you have certain tax, National Insurance and reporting obligations.

What’s included

Public transport costs include:

season tickets provided for employees
season ticket costs reimbursed to employees
loans made to employees to buy season tickets
contributions to subsidised or free public bus transport

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Expenses and benefits: public transport

Overview

What’s included

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Expenses and benefits: public transport

Overview

What’s included

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