Clause 60 - Exemption for works bus services: extension to minibuses
Finance Bill
11:15 am
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
The Finance Act 1999 introduced measures to encourage employers to develop travel plans that would reduce employees' use of cars to travel to work. One measure was the removal of the tax charge to employees and the national insurance charge to employers where the employer provided a bus service specifically for employees' commuting journeys. Currently, such buses must have a minimum of 12 passenger seats, but the clause extends the tax exemption to employer-provided minibuses with nine, 10 or 11.
Some Committee members will recall the lively debate about the right number that took place in the 1999 Finance Bill Committee. I think that the initial proposal was that the number should be 17. The Minister who dealt with the matter agreed, I think on Report, that the number should be reduced to 12. I think that, in Committee at that time, the right hon. Member for Fylde (Mr. Jack) proposed reductions to 10 or eight passengers, so I hope that he will particularly welcome the change. We aim to make it easier for employers of smaller work forces to include the provision of a works bus as part of a travel plan. It is already possible for small employers to join together to provide a works bus service, but we recognise that it is not always feasible to do so.
Amendment No. 13, which has not been moved, suggests that we consider vehicles with fewer seats. The tax exemption is aimed at removing the tax charge where an employer provides a works bus service. The intention is for many employees to transfer out of their own vehicles and on to a works bus for their commuting journeys.