With the RMT and UNITE unions having gone ahead with their planned train strikes this week, and more potentially on the horizon, many employers are wondering as to what support they can provide – tax efficiently – to their employees, write’s Robert Salter, Director at Blick Rothenberg.
To help employees make it into work, not just this week but potentially over the whole summer if strike action continues as feared, there are a number of ways employers can help soften the impact of an empty workspace
The provision of accommodation near someone’s regular office (or the covering of someone’s home-to-office travel costs) by an employer usually represents a taxable benefit. However, there is some good news for employers and employees in this regard.
Specifically, while employers are not usually able to provide ‘home-to-office travel costs’ of an employee, or their hotel costs near the office without incurring a liability to tax and NICs, the tax rules specifically allow employers to provide support to employees – where such support is as a result of strike action – without incurring a liability to either tax or NIC.
Moreover, the rules allow such support to be tax-free either where:
a) Employers provide this strike-related support directly (e.g. Uber or taxi trips could be legitimately ordered by and borne by employers in case of the strike without creating a tax charge), or
b) Alternatively, where employees initially incur the costs of the travel or hotel accommodation and then they expense these costs to the employer (e.g. with receipts).
It will not always be necessary for employers to provide support to their employees in this way, given that the Covid lockdowns have shown that many employees are able to continue working effectively from a home office. However, for those employees where home working is not a realistic option, employers should look at providing support such as this wherever it is appropriate to do so, as the tax and NIC relief is only available in this situation where costs are specifically borne by the employer.
Unlike with many wider business expenses (e.g., professional subscriptions), the tax regulations make it clear that tax relief for these strike-related costs are not innately tax deductible (e.g., on a tax return), where the costs have been fully borne by the employee.
If you would like to discuss any of the above, please get in touch with Robert Salter using the details on this page.