Reimbursement for transporting non employees

I work for a local authority where some members of staff regulalry transport service users.  This is a genuine business need, is an important part of the work and is more cost efective than seeking out other means of transport. 

We do have an allowance for the transport of passengers, however, this is restricted to transport of employees and becomes a taxable benefit if the passenger is not an employee (HMRC rules).

Are there any other employers out there who compensate/reimburse staff for transporting non employees and how is it done?

  • First before you do anything I would check out the insurance treatment of this private "hire" arrangement. It "may" invalidate their insurance depending on how you do it.
  • My first thought was along the same lines as Keith re. their insurance, but assuming you've got that all sorted out is there any reason you wouldn't just gross the value up and pay through payroll so that the individuals receive the same net payment as when they transport non-employees?  This obviously increases the cost to your organisation, so you'd need to look at whether it is still cost effective.

  • Thanks both.  We require valid insurance for this type of work so hopefully this element is sorted.  However, it's a good point

    We are seeking tax advice at the moment - the grossing up may be seen as a way of trying to avoid the rules!

    I will keep you posted. 



  • Hi Rebecca

    if our staff use their own car to support someone, the person they are supporting pays the mileage directly

    In all providers I know this tend to be quite standard