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Larger employers typically offer season ticket loans, repaid pre-tax through a salary sacrifice arrangement, so you can effectively discount the cost by your ma

Larger employers typically offer season ticket loans, repaid pre-tax through a salary sacrifice arrangement, so you can effectively discount the cost by your marginal tax rate. Higher rate (40%) tax payers therefore only pay £3,000 for a £5,000 season ticket (less if you include NI and other deductions)

dogma1138 9y ago
Indeed, most employers however offer it only after 6 months of employment and you have to maintain your employment for 12 months if not, you have to repay the loan in full which often means you cannot benefit from the offset tax liability. It's also a case where those who can afford it more easily and can also afford London rent get discounts while people that earn less do not.
bencoder 9y ago
I don't think those are pre-tax. They are just interest free loans. At least, in none of the companies I've worked for has it been pre-tax
isostatic 9y ago
They aren't pre-tax, which is a major reason I work from home - when I took my current job I refused to work in their office as it would be £2500 a year, which means I'd have to earn about £6500 more just to pay for the commute, add the extra 2 unpaid hours a day and the commute would mean I'd want an extra £20k pre-tax (that's £100 post-tax per week for the time, or £10 an hour) My effective marginal tax rate because of this (income between £50k and £60k) is 60% -- 40% income, 2% NI, 18% reduction in child benefits. The company has to pay employer NI too. That means for every £1138 they spend on a payrise for me, I get £400. While my income is in the top 10%, our household income is pretty average for people with 2 children because my wife only works on occasional freelancing projects to keep fingers in the pie (say 10 days a year), and I work from home the majority of the time - we don't want to outsource the upbringing of children. If we do pay for child minding, it's an inlaw, which means petrol costs and a bottle of wine - which all comes out post-tax, so doubles in price compared to sending kids to a factory tax free (or "childcare").

dogma1138 9y ago

Indeed, most employers however offer it only after 6 months of employment and you have to maintain your employment for 12 months if not, you have to repay the loan in full which often means you cannot benefit from the offset tax liability. It's also a case where those who can afford it more easily and can also afford London rent get discounts while people that earn less do not.

bencoder 9y ago

I don't think those are pre-tax. They are just interest free loans. At least, in none of the companies I've worked for has it been pre-tax

isostatic 9y ago

They aren't pre-tax, which is a major reason I work from home - when I took my current job I refused to work in their office as it would be £2500 a year, which means I'd have to earn about £6500 more just to pay for the commute, add the extra 2 unpaid hours a day and the commute would mean I'd want an extra £20k pre-tax (that's £100 post-tax per week for the time, or £10 an hour) My effective marginal tax rate because of this (income between £50k and £60k) is 60% -- 40% income, 2% NI, 18% reduction in child benefits. The company has to pay employer NI too. That means for every £1138 they spend on a payrise for me, I get £400. While my income is in the top 10%, our household income is pretty average for people with 2 children because my wife only works on occasional freelancing projects to keep fingers in the pie (say 10 days a year), and I work from home the majority of the time - we don't want to outsource the upbringing of children. If we do pay for child minding, it's an inlaw, which means petrol costs and a bottle of wine - which all comes out post-tax, so doubles in price compared to sending kids to a factory tax free (or "childcare").