Thursday, September 6

Common Questions Related to Travel to Work Scheme

Under the travel to work scheme, the employer purchases season tickets for their employees who wish to be part of the scheme. This scheme is implemented by means of a salary sacrifice arrangement, where the cost of the tickets is deducted from the gross salary.

However, in case of any misinterpretations, it is better to have doubts cleared between the employer and employees about the travel to work scheme. The following section will help you with the same.

What is the travel to work scheme? The travel to work scheme is a provision where employers provide financial assistance to their employees while they travel to work from home. The employers provide discounted bus ticket or LUAS ticket to their employees free of Tax and National Insurance Contributions when certain conditions are met.

The travel to work scheme functions in conjunction with salary sacrifice arrangement to exempt Tax and National Insurance Contributions benefits in kind. The employees under travel to work scheme agree to a minimum reduction in their salary in exchange of discounted travel tickets from the employer.

What savings will be available from the travel to work scheme? Under travel to work scheme, for a basic employee earning less than £44,000 for the 2009/10 tax year – £37,400 plus personal allowance enters into a salary sacrifice arrangement to provide £500 from his salary in exchange of £500 LUAS ticket.

The Tax and NIC (National Insurance Contributions) will be £155 for the employee. For higher salaried employees, the Tax and NIC benefit will be more.

What will the employees take home? The employees who participate in travel to work scheme will take home a less amount of salary; however, the deducted part goes into their benefit only. Besides this, if they were to buy regular travel tickets, the money will be from their taxed income.

When can employee enter travel to work scheme? All employees can join travel to work scheme anytime. The only requirement is the employer may require an employee to participate in the scheme after they have worked for them for a minimum time.

Can an employee leave travel to work scheme early? Travel to work scheme requires an employee to complete 12 months after which an employee may walk out of the scheme.

However, in case a person leaves, he/she needs to give back the seasoned travel ticket to the employer. On return of the ticket, the employer will refund the money of the unused part of the ticket.

What is the procedure after the end of the scheme? Employees can revert back to the scheme after completion of the 12 month period. For employees not interested in further use of this, they can get their full salary.

These are some of the common questions that need to be understood by the employees before they enter the travel to work scheme.

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