Should workers be able to claim tax relief on the cost of commuting?

Boris Johnson has called for tax relief on commuting costs.

Boris Johnson has called for tax relief on commuting costs.

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When Boris Johnson and George Osborne set off on a trade trip to China at the weekend (October 12) odds are that the London Mayor had a word with the Chancellor on behalf of cash-strapped commuters. Mr Johnson wants season ticket holders to receive tax relief to help ease their rising cost burden – with the average season ticket set to reach £2,281 next year.


The savings could be hundreds of pounds and help to offset the rising cost of gas and electricity bills, with SSE the first energy provider to announce an 8% rise for customers.

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Already an e-petition has been started on the website of HM Treasury by David Ayres. It says: “I call upon the Treasury to review the possibility to grant income tax relief for commuters that use public transport to travel to and from their place of work.”

“I believe this would have a two-fold effect: Firstly, it would encourage more people to use public transport, as there would be a clear benefit to use the train as opposed to the car, for instance. Secondly, it would give the working classes more money in their pockets; in times that are hard this will allow them to spend more at the tills, thus invigorating the economy. The extra spend at the tills will compensate for the loss of income tax in the outset. The mechanism for calculation of tax relief can be worked through the standard self-assessment forms, or for PAYE earners it can be added back to their tax code via a declaration.”

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Train fares are due to rise by an average of 4.1% from January (rail companies can increase prices by one point above the July Retail Price Index inflation figure, which was 3.1%). But the worst affected routes could see fares rise as much as 9.1% and thousands more commuters join the ranks of those paying more than £5,000 a year just to get to work.

“If you have to use public transport morning and night, then you know that it can take a huge slice of your income,” says Mr Johnson. “Every autumn we face the same dilemma. If we follow the pleas of our officials and raise fares to cope with inflation and the cost of investing in our systems, then we are tightening the squeeze on people who have already seen their disposable income shrink over the last five years. If we are irresponsible, on the other hand, and we fail to replenish the ‘fare box’, then we risk disaster. There is a compelling case for tax relief.”

Of course, Mr Johnson is speaking mainly on behalf of those who commute into and around the capital but the tax savings would equally apply around the country.

The Labour Party has challenged the mayor to freeze fares in London next year, attacking the regular price rises that make travel in the capital the most expensive in the world. Maria Eagle, Labour’s Shadow Transport Secretary until this month, said: “David Cameron has already broken his promise to hard-pressed commuters to cap this year’s fare rises at one per cent above inflation, with some fares rising by as much as 9.2 per cent as a result.”

Mr Johnson maintains that tax breaks would be a more effective tool than a price freeze which would “benefit tourists and casual passengers who did not need or deserve help”. Tourists, day trippers and weekend breakers boosting London’s economy may think differently. Mr Johnson also takes an apparent side-swipe at pensioners’ free travel, saying that 40 per cent of passengers travelled for nothing but there would be mayhem if any attempt was made to strip the “affluent bourgeoisie” of old-age bus passes. He says the entire burden of fare-paying is carried by the other 60 per cent including “workers on low or moderate incomes who travel large distances every day to their places of employment and who have absolutely no choice in the matter. It is time we did something specifically to help them, and that something is to give tax relief on travel,” he suggests, adding that a commuter buying a £784 annual bus pass would save £251 in tax and National Insurance, and their employer would save £108.
The Campaign for Better Transport’s chief executive, Stephen Joseph, is welcoming of the proposal but stresses it has to be coupled with an end to above-inflation fare rises to make transport affordable. He points out: “Providing tax relief for people buying season tickets is an idea we’ve been promoting for a number of years so we fully support its introduction, particularly for bus users who are generally lower paid and have seen large fare rises in the last few years. There is already similar scheme in the US that is popular, works well and doesn’t cost the government a fortune. We see no reason why a comparable scheme couldn’t work here and we know there is support from employers and bus operators. The biggest issue has always been annual above inflation fare increases and there is no change of government policy on this. This is bitter news for everyone who relies on the train to get to work, not least the large number of commuters in marginal constituencies who will be a key group at the next election.”

14 Responses to “Should workers be able to claim tax relief on the cost of commuting?”

    • paul

      i think everyone should claim for costs to travel to + from work no matter what form of transport they use, its a big chunk out of meager wages for some, this would really help people stay employed + even help people take up employment

      Reply
  1. Claire Fisher

    Prices need to be capped, and train companies should be made to offer better discounts for low wage earners. This is the problem with privatisation. But I don’t think everyone using public transport should get a tax rebate. This needs to be means tested and any rebate should be given by the train company, not the government (ie the taxpayer).

    Reply
  2. Catherine Dorricott

    That is unfair. I have to use my car as there is no way for me to get to work using public transport due to disabilities. Would I get a rebate for cost of fuel? Your government won’t spend the same time or money on rising fuel costs!

    Reply
  3. Steve Cook

    What about people that have to drive to work where public transport do not fit their timetable or destination! (I drive 60 miles a day for mine)?

    Reply
  4. Charlotte McKenzie

    Why will there only be tax relief for public transport communters? What about those workers who don’t have access to public transport because they live in rural areas and there is no public transport?

    Reply
  5. j charlton

    tax relief should be for everybody not just public transport, take a look at Spain their transport system is fantastic and affordable to all.
    The petrol and diesel prices in this country are too high.
    China can ship items to Britain for very little, not the case in this country we are unable to ship abroad due to the high pricing. Royal Mail and courier prices for overseas are just unreasonable. Hence the country is at a stand still.

    Reply
  6. Shirley

    Albeit fair to people using public transport not fair to drivers who can not use public transport because of shift times and also lack of public transport in rural areas my daughter who has special needs has just been awarded a bus pass but as it is only from 9.30 am she can’t use it to get to college and bus services are minimal in rural areas if not at all how fair

    Reply
  7. Sharron King

    How can HM revenue give tax relieve on transport when the government are laying off so many public workers to save money another propaganda stunt from our government and it’s side kicks by the way Mr Cameron are you going to be taking a paycut and work more hours like your asking my husband and his fellow co workers who clean up the crap from the streets in our country. Does your wife have to clean your clothes that are covered in dog muck and have you come home say to her by the way love I lose my job on the 1st of Dec 2013 put I’ll get it back if I take on double the workload for half the money . We won’t be able to get casback on our travel expense because my husband has to start work before the bus service starts work . Corruption corruption corruption . By the way Boris Johnson we can’t afford to go for a day out in the capital of our country because of energy and transport companies hiking up their costs while they have the government in their pockets and who is paying for Mr Cameron’s utilities and car fuel bills while he living at number 10 that’s right US the TAXPAYERS

    Reply
  8. Nick

    Realistically if tax relief is given, we should not be able to back date it for previous years simply because tax payers who do not use public transport will be funding the rebates through their taxes, which is unfair. If petrol prices were lowered then the cost of public transport would reduce because it is costing the companies less and the costs to non-public transport users would reduce also. I really do think lower fuel costs is the way to boost our economy.

    Reply
  9. Carolyne Doran

    Whilst I like the idea in principle, I don’t think it should just be for public transport. You should be able to claim tax relief on the mileage from home to your place of work in your own car. My insurance covers me for commuting, so I should be eligible for this as well as those using public transport. Not everyone works hours or in places where using public transport is feasible. I could use the bus, but I would have to do fewer hours as there is a long walk at either end, and at certain times they only run once a hour, and the route is through a couple of big traffic bottlenecks which I can avoid in the car, meaning I would become more dependent again on Tax Credits and Housing Benefit (or I could try and get a job in the small town I live in, which would pay less than the hourly rate I currently get, so the same point applies).

    We really need a massive cut in fuel duty, which would (well, SHOULD) also cut the cost of using the bus.

    Reply
  10. jess burton

    yes we should get as we travel to it and its cost us money to get there and back

    Reply

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