To ease the financial burden on their employees, some employers may look at paying or refunding transport costs for their employees when they return to work. There are tax implications that should be examined. As a general rule, where an employer pays or refunds an employee the cost of transport from work to home, this is considered to be a benefit as it is classified as a private journey. 

In some circumstances there is an exemption from paying tax on this benefit. For this to happen, all of the following 4 conditions must be met:

• the employee has to work later than usual, and until at least 9pm
• this happens irregularly
• by the time the employee finishes work, either: public transport has stopped, or it would not be reasonable to expect them to use public transport
• the transport is by taxi or similar road transport

Employees may also regularly travel to work in a car with one or more other employees using a car-sharing arrangement. If this arrangement stopped because of unforeseen and exceptional circumstances, which are coronavirus related, and the employer provides transport or reimbursement of the expense of transport from their employee’s home to workplace, this may also be exempt.

HMRC’s guidance is clear that if these requirements are not met, free or subsidised transport is taxable and should be reported through a PAYE Settlement Agreement as a coronavirus related benefit.