Transport between work and home for disabled employees – Travel and Subsistence PaymentsThursday, August 12th, 2010
Under the provisions of section 246 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), no liability to income tax arises in respect of
- the provision of transport for a disabled employee, or
- the payment or reimbursement of expenses incurred on such transport,
where the transport is provided or the expenses are incurred in respect of ordinary commuting. The exemption also applies if the transport is provided by means of non-cash vouchers or the employer’s credit card.
A “disabled employee” in this context is an employee who has a physical or mental impairment with a substantial and long-term adverse effect on the employee’s ability to carry out normal day-to-day activities.
HMRC has updated the technical guidance on this subject provided for its own officers in the Employment Income Manual. The new, additional material draws a distinction between the definition of “disabled employee” in ITEPA for tax purposes and that given in section 1 of the Disability Discrimination Act 1995 (section 6 of the new Equality Act 2010) for the purpose of preventing discrimination.
A number of medical conditions that employers must consider in order to prevent discrimination are not relevant in the context of tax. Only the ITEPA definition (above) is relevant for tax purposes. As a result, the medical conditions that do not qualify for tax exemption are where employees:
- have a recurring disability which may be in remission, where the impairment ceases to have a substantial adverse effect but it is more than likely that the substantial adverse effect will recur in the future. Conditions specifically mentioned in the discrimination legislation include multiple sclerosis, HIV and cancer.
- have had a disability, as defined by the disability legislation, in the past but are no longer disabled or have since recovered.
- have an impairment and may be receiving medical or other treatment which alleviates or removes the effects (though not the impairment). In such cases, the treatment is ignored and the impairment is taken to have the effect it would have had without such treatment. This does not apply if substantial adverse effects are not likely to recur even if the treatment stops (i.e. the impairment has been cured).
An employee who has previously had a disability covered under the discrimination legislation but who is able to carry out normal day-to-day activities at the time an employer is providing the transport for commuting journeys or reimbursing the costs does not meet the terms of the section 246 definition.