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3. Inland Revenue Rules
From Lime One Ltd
Before commencing any changes in our client's policies we are analysing data on the type of work contracts and the use of the vehicle for each subject affected by the charges with our clients as part of our on-going service. The reasons for this are as follows:
- Under current Inland Revenue Rules the payment of work travel is taxable income so staff by virtue of their chosen domicile area or preference mode of travel could be treated more favourably than their colleagues who choose to live in a different location or prefer to travel by Public transport. Effectively they could receive payment for travel to work.
- If this allowance is paid as additional income it will need careful treatment to avoid issues over time if the staff member leaves the charging area or a successful challenge is made to the principle of congestion charging. These issues need to be addressed to avoid problems as above and also for lawful deductions to be made in the event of overpayments of these charging allowances.
We do expect the Inland Revenue to comment shortly on the tax and other PAYE ramifications on employer's reimbursement. In the meantime we have looked at the problems generally faced by those employees who seek to use their car, to see if we can come up with alternatives that resolve this issue for those involved. Ideas so far from our clients have included more flexible working, secondment to branch offices for those who do not wish to pay and tele-working for part of the week at at least to reduce the payment expended by the employee. All our London business clients who are based in the heart of the city have been looking at this with us since last July when it became clear it was likely to be implemented. There is no doubt that flexible working arrangements for those who can is the preferred option.
The Inland Revenue have produced a software guidance document. Section 2.10 deals with this subject. It says bluntly 'for employees and office holders, the normal rules on the tax and NICs treatment of employee travel and subsistance apply'. As such therefore until the Revenue alter their rules on this charge we are adopting the position that it needs to be treated with caution for most employers. Hence the observation on flexible working practices which extend some of the present rules on taxation on travel expenses.
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4. Questions Concerning Congestion Charges and Access Restriction
From Alexy
- Have you thought about regulations restricting vehicular access? Why is a total ban on car traffic unlikely to be the optimal solution to congestion and, from an economic perspective, is pricing likely to be a superior solution to restriction to access?
- Why do some people oppose congestion charges on the grounds that they are a 'regressive tax'? What is a basis of this argument? Is it valid, bearing in mind that nobody objects to petrol stations charging rich people and poor people the same price for fuel?
- What do you think, what are the internal and external economic costs associated with inner city congestion and how can these cost be measured?
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