Chapter NMWM11200
| Published date | 16 April 2016 |
| Record Number | NMWM11200 |
| Court | HM Revenue & Customs |
Relevant legislation
Deductions for transport
Payments for transport
The legislation that applies to this page is as follows:
* National Minimum Wage Regulations 2015, regulations 12 & 13
Charges involving transport should be considered under normal deduction (NMWM11020) and payment (NMWM11030) rules.
As with all deductions and payments it is essential that the nature of all the arrangements and transactions involved are fully understood. Transport costs often feature in “salary sacrifice schemes” (NMWM09300), and in “travel schemes” (NMWM11110).
It is important to distinguish between any charges (which may be described by various labels, such as an “expense” or an “allowance”) and get a full understanding of what each individual charge represents.
It is also important to determine the nature of the transport; i.e. are the charges in respect of home to work transport or for transport connected to the employment.
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Deductions for transportWhere a deduction is made from a worker’s pay, the amount will always reduce national minimum wage pay unless it is:
- An amount owed by the worker to a third party (e.g. a transport company) (NMWM11180). In these cases, it is important to confirm that the worker is paying his own costs and is not simply meeting the employer’s liability to the transport company. If the employer has contracted with the transport company to provide transport to workers, then any deduction will reduce the worker’s national minimum wage pay, as it is being used for the employer’s own use and benefit. It is immaterial whether or not the worker benefits from the arrangement or whether the service provision is subsidised or running at a loss.
Example 1 - An employer contracts with a third party bus company to provide a transport to work service for their workers. The employer deducts a transport charge from the worker, which is then paid over to the third party.
The deduction will reduce the worker’s national minimum wage pay. This is because the arrangement for the provision of transport is between the employer and the third party (i.e. the employer is purchasing the service from the third party). The employer is liable to pay the bus company for the provision of the transport and the deduction from the worker made by the employer is being used for the employer’s own use and benefit to meet their liability to the bus company.
Whilst the employer may be immediately paying the monies deducted over to the...
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