The government has changed its mind about abolishing the tax relief for late-night taxis, so black cabs will keep on running for employees of law firms.
Many firms will be well aware the relief provides income tax and National Insurance contribution exemption against the costs incurred in an employee having to take alternative transport to get home. The relief is only available when (irregularly) employees are required to work late to at least 9.00pm, and by the time they go home either public transport has stopped running or it would be unreasonable to expect them to travel home by their normal means - hence the name ‘late-night taxi’ relief.
It was originally proposed that the relief end in April 2012, but the government backtracked in early December after deciding that abolishing it would negatively impact on certain groups of employees and create more paperwork and administration - something no firm would welcome.
In addition, the government found during its consultation on the abolition of tax reliefs that the vast majority of businesses were not happy about the plans to do away with the relief. Businesses from a wide variety of sectors argued that the relief is used by a diverse range of employees and that it is of real benefit to the lower paid. I’m sure most law firms will also agree with additional arguments that were put forward concerning safety and security, as it was suggested that the current relief helps employers to manage these risks by providing female employees with safe transport home. Better safe than sorry!
Check the HMRC manual for a full description of the late-night taxi benefit and the working conditions required to take advantage of it.
Louis Baker, head of professional practices group at Crowe Clark Whitehill