04 January 2023
Large parts of the UK continue to be hit by ongoing strike action causing travel disruptions for many. Some employers will be able to allow their workforce to work from home to avoid inevitable travel disruption.
However, for those employers who employ key workers or, for example hospitality workers, working from home may not be an option and they may still require their workers to attend their normal place of work. For employees falling in this camp, it may be a struggle getting to their normal place of work due to rail strikes and the travel disruption that this is causing. Employees may also incur additional expenses in the process (taxis/hotels etc). These types of expenses would typically be taxable should they be reimbursed to employees.
However, where there is strike action taking place, there is an exemption in the legislation for certain types of expenses from being subject to income tax and national insurance contributions (NICs). Employers may therefore be able to support with travel costs free of income tax and NICs where the costs are incurred as a result of the strike.
The exemption covers the following costs:
- the provision of overnight accommodation at or near the employee’s permanent workplace;
- payments to the employee for expenses incurred in connection with such accommodation;
- the provision for the employee of transport for the purpose of ordinary commuting; and/or
- payments to the employee for expenses incurred on such transport.
The exemption only applies to reimbursed expenses or payments made by the employer directly. It does not apply to round sum allowances paid to the employee to assist with costs connected to getting to their normal place of work.
Where an employee spends more on ordinary commuting or subsistence because of a strike and the employer does not reimburse them, the employee is not entitled to a deduction for the extra expense.
Whilst potentially good news for employees, it could also represent an important benefit for employers to offer where they are struggling with staff shortages due to the public transport challenges. An employer can support their employees with travel costs connected to their attendance at the employee’s normal place of work by way of reimbursement or direct payment, both being exempt from income tax and NIC. However, this does have an impact on employers as their travel and subsistence costs will increase.