Agenda item

Further to Minute 13 of the meeting of the Council held on 17^th June 2020, the Board gave consideration of the Council Motion “Tax Relief for Public Transport Travel” that had been referred to the Overview and Scrutiny Board for consideration.  The Motion had sought approval for the Chief Executive to write to the Prime Minister and the Chancellor of the Exchequer to request that the Government introduces a tax relief scheme on seasonal travel tickets (following the principles outlined in Mr Johnson’s Telegraph article in 2013), making this effective as soon as possible, and to write to the Mayor of Greater Manchester saying that we all should support such a scheme.

The Board noted there had been several Government led initiatives to enable employers and employees to make savings through salary sacrifice schemes, such as childcare vouchers and cycle2work.  Under these schemes the employer provides the funds upfront for an employee to buy goods or services which the employee agrees to pay back from their salary, usually over a period of 12 months.  The deductions are calculated from the salary before tax and national insurance is calculated meaning the employee makes savings in their tax and national insurance contributions and the employer saves on their employer national insurance contributions.  While salary sacrifice schemes for public transport (excluding rail) were previously made available to employers by Government, in the Autumn Statement of 2016, the Chancellor announced a tightening of salary sacrifice schemes to come into force on 6^th April 2017.

Any employer can set up an approved scheme for their staff.  With regard to the Council’s offer, Pay and Reward currently manage schemes of this nature which are approved by HMRC: there is not currently an approved scheme to allow a salary sacrifice scheme to be set up for public transport travel.

Members considered whether such a scheme should apply only to annual tickets as suggested by previous practice, or whether the tax exemption might apply on other terms such as monthly or six monthly.  The uncertainty of employment in current circumstances and the potential for the scheme to be costly upfront for smaller employers were considerations.  It was noted that as a result of Covid-19 and with people returning to work, employers were asking employees not to car share meaning that car usage would increase unless other options such as public transport were made more attractive.  It was however suggested that the Motion was about the principle of tax relief for public transport as opposed to the detail.

In discussion it was noted that the Council was not offering a ‘bike to work’ scheme and it was suggested that the reason lay with payroll systems and the pending implementation of a new payroll system by the Pay and Rewards Team.

RESOLVED that

1.            This Board would support asking the Chief Executive to write to the Prime Minister and the Chancellor of the Exchequer to request that the Government introduces a tax relief scheme on seasonal travel tickets (following the principles outlined in Mr Johnson’s Telegraph article in 2013), making this effective as soon as possible  and to the Mayor of Greater Manchester saying that we all should support such a scheme;

2.            The Pay and Reward Team report to the next meeting of the Board on matters relating to the offering of a Bike to Work scheme.