'Free' bus travel to work proposed

The measures could reduce congestion on the roads and help rural areas

		By Sarah Toyne BBC News Online consumer affairs reporter

Workers could receive free or subsidised bus fares under a consultation announced by the government.

Experts believe that the proposals, which are part of the Chancellor's green strategy, could revitalise rural bus routes and help free-up congestion on the roads.

Under the proposals contained in a document from the Inland Revenue, the tax benefits for use of company "shuttle" buses would be extended for public bus use.

Many employers would prefer to subsidise an existing local bus service rather than run a bus themselves

Inland Revenue

Current rules mean that companies can pay public bus companies to influence their timetables, but they cannot ensure cheaper fares for their staff.

The proposed changes, however, would mean that they could subsidise or provide free tickets - and without being taxed.

At the moment, if an employer subsidises or offers free travel on buses it is taxed as a "benefit in kind".

Welcome news

Experts welcomed the consultation, which will be open until 31 December 2001.

Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA) said: "It is a simplifying measure, which could result in free public transport on dedicated services for some employees."

If the proposed changes were introduced, flagging local bus services could be revitalised and road congestion cut.

Kevin Cocker of Go-Ahead Group, public transport company, which operates bus services in many parts of the country including Oxfordshire, Sussex, and County Durham said: "It might help situations when you have large factories in the countryside, for example.

"It would provide investment in local bus services for employees and then the community would gain a valuable local service."

The government is trying to divert people away from their cars and onto public transport.

From April 2002, company cars are to be taxed on the basis of exhaust emissions rather than business mileage and age of the car.

It has also introduced other tax breaks for smaller car owners.

Existing measures

The Labour government has already changed the tax position for company bus use.

Employers are no longer taxed on buses used to ferry workers to the office (nine seats and above) without generating a tax liability.

They can also support public bus companies to ensure the services required by their employees.

But critics have argued that the government should go further. They say that current rules mean that staff are put off using public transport.

The Inland Revenue proposal said: "The government has received representations that, in principle, many employers would prefer to subsidise an existing local bus service rather than run a bus themselves."

The rule changes would require new legislation.