Revised HMRC guidance on salary sacrifice for bus travel

April 30, 2013 2013


HMRC don't like salary sacrifice (despite having some in place for their own staff). We know it, they know it and over the last few years they have been doing as much as possible to make salary sacrifice difficult or impossible for other employers.

Latest on HMRC's salary sacrifice hit-list is bus travel.

New guidance was published yesterday by HMRC which, although not law, is a very good indication of the resistence employers are likely to face going forward with any existing or new salary sacrifice schemes involving bus passes. This new guidance comes into force immediately albeit there is some protection for existing salary sacrifice arrangements that have not ended yet.

The majority of the new guidance is centred around the issue of employer support to the bus company. The legislation states that to qualify for exemption, the employer can provide "financial or other support" to the bus company. HMRC's view seems to be that some employers have been playing on these words to set up a salary sacrifice scheme that is outside the spirit of the exemption.

This latest guidance makes HMRC's views on what is acceptable support much clearer and what does NOT work (in their eyes) in terms of the salary sacrifice side of such arrangements. The main points around this include:

1. The need for employer support to continue for the duration of the salary sacrifice scheme, i.e. not just a one-off payment or facility

2 The support needs to be "meaningful" to qualify. So a £250 donation to the bus company probably wouldn't cut-it or something equally minor.

3. Bulk purchasing arrangements do not qualify as support for these purposes.

4. Support for regional or zonal journeys do not count.

5. If the financial support provided by an employer is recouped from employees via the salary sacrifice payments there is effectively no support from the employer to count towards the exemption. This could potentially catch a lot of employers out who have already set up schemes on this basis.


Employers with existing bus travel salary sacrifice schemes, or any organisation who was thinking of setting one up, really should be getting advice on what this new guidance means for them and employees. We have extensive experience in this area so please do contact us if you need any help or advice around this.

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