Income Tax (Earnings and Pensions) Act 2003 section 242

Works transport services

Section 242 provides an exemption from income tax on the benefit of employer-provided works transport services using buses or minibuses, provided certain conditions relating to availability, usage and passenger eligibility are met.

• A works transport service provided by bus (12+ seats) or minibus (9–11 seats) is exempt from income tax where it is generally available to all employees of the employer concerned.
• The main use of the service must be for qualifying journeys by those employees, and it must be used only (or substantially only) by the employees for whom it is provided or their children under 18.
• A vehicle with 9–11 seats does not qualify as a minibus if it has seats that fail construction and use requirements and, once those disqualified seats are excluded, the remaining seating capacity is 8 or fewer.
• Seating capacity is determined in line with the rules used for vehicle excise duty on buses under Schedule 1 to the Vehicle Excise and Registration Act 1994, regardless of whether the vehicle is formally classified as a bus.