Late night taxis home for employees: the exemption

An employer can pay for a taxi home free of tax and National Insurance only if the employee was required to work later than usual and until at least 9pm, such late working happens irregularly, and by the time they finish public transport has stopped or it would not be reasonable to expect them to use it. The exemption in section 248 of the Income Tax (Earnings and Pensions) Act 2003 is capped at 60 journeys a tax year, and every condition must be met on every journey.

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Why is a taxi home normally taxable?

Travel between home and a permanent workplace is ordinary commuting, which is a private journey. HMRC’s Employment Income Manual at EIM21831 explains that a taxi home paid for by the employer is therefore a benefit to the employee. If the employer reimburses the fare or pays the employee’s own bill it is taxed as earnings under section 62, and if the employer contracts with the taxi firm it is a taxable benefit under section 203, as EIM10220 sets out. Section 248 is the exception, and it only applies where its conditions are met in full.

What exactly are the late working conditions?

Section 248(2) sets out four conditions, all of which must be met for each journey:

the journey is made on an occasion when the employee is required to work later than usual and until at least 9pm
such occasions occur irregularly
by the time the employee stops work, public transport has ceased to be available for the journey, or it would not be reasonable to expect the employee to use it
the transport is by taxi or similar private road transport

The journey must be from the employee’s workplace to their home. A separate limb of section 248 covers a journey home when an employee who regularly car shares with colleagues cannot use the shared car because of unforeseen and exceptional circumstances.

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What does “later than usual and until at least 9pm” mean?

Both parts must be satisfied. HMRC’s guidance at EIM21832 says something is usual if it conforms to a common or ordinary pattern. Its examples show how this works:

A pub worker who usually works until closing time does not qualify for a taxi at closing time, because late working is usual for them. If they are kept on unusually late for extra clearing up, the first condition can be met.
An office worker who normally works 9am to 5pm and is asked by a manager to stay until 10pm meets the condition. If they chose to stay late without being required to, they would not.
An employee contracted to finish at 8pm who commonly works until 10pm or later has an established pattern, so a taxi on a night when they work to their usual late finish does not qualify.

When is late working “irregular”?

EIM21833 says irregularly means not following usual or established custom. A taxi every Friday night does not qualify, and nor does a contractual requirement to work late one night a week even if the day varies. HMRC’s examples include a payroll clerk required to stay until 9pm on the last but one working day of every month: those 12 occasions are a regular part of the job, so none of the taxis is exempt. By contrast, a couple of late nights to sort out an unforeseen problem on a project are irregular, provided they do not become a continuing pattern.

When is public transport not reasonably available?

Whether public transport has stopped is a question of fact. EIM21834 accepts that if a journey needs two forms of transport and one of them has stopped, public transport is unavailable for the whole journey.

The harder question is whether it would be unreasonable to expect the employee to use public transport that is still running. HMRC does not accept that any of the following is enough on its own: travelling in the dark, being tired after a long day, carrying a heavy bag, using an unmanned station, or a less frequent service. It does accept that a journey which would take significantly longer than the same trip earlier in the day can qualify, and that an employee’s perception of personal safety can be considered, provided the facts show a significant difference from the normal situation. Its example of a train journey taking nearly two hours instead of the usual 45 minutes is accepted as qualifying.

How does the 60 journey limit work?

Section 248(1)(c) only exempts a journey if fewer than 60 previous journeys in the tax year have been within the section, so the cap is 60 a year. It is a single limit shared between late working journeys and car sharing failures. HMRC is clear at EIM21831 that this is not an annual allowance of 60 free taxis: a weekly taxi home fails even though it amounts to fewer than 60 journeys a year, because the late working is regular. If more than 60 qualifying journeys occur, the first 60 stay exempt and only the excess is taxable, as EIM10220 illustrates with 63 journeys, 60 exempt and 3 taxable.

Is National Insurance due on a qualifying taxi?

No. NIM06360 explains that the Social Security (Contributions) Regulations 2001 disregard a payment for late night transport that is not taxed because of section 248, and a non cash voucher for such a journey. Where the employer contracts directly with the taxi firm, the provision is a payment in kind outside Class 1 and, because it is not taxable as general earnings, outside Class 1A too. If the journey fails the conditions, tax and National Insurance follow the normal rules.

What records does HMRC expect?

EIM21831 says an employer claiming the exemption must have management checks in place and keep enough records to show the conditions are met in every case. A published taxi policy is not enough if nothing ensures it is applied, and simply giving staff access to an on call taxi service after 9pm means the journeys are treated under the normal travel rules. Advance authorisation is not required, but a verifiable internal process is. In practice that means recording, for each journey, the employee, the date, the usual and actual finish times, who required the late working, and why public transport was unavailable or unreasonable.

Illustration only. An analyst who normally leaves at 6pm is asked to stay until 10.30pm three times in October to finish an urgent bid. Her last train home has gone by 10.15pm. All four conditions are met, so the three £35 taxis are exempt, and the log records each journey. If she later starts working until 10pm every Thursday, the Thursday taxis become regular and taxable.

What if a taxi does not qualify?

The employer can treat the cost as taxable pay or as a reportable benefit, often through payrolling or the P11D process. EIM21831 also notes that taxi fares will normally count as minor items that can be included in a PAYE Settlement Agreement, where the employer pays the tax instead of the employee. Home to work transport for a disabled employee is covered by a separate exemption in section 246. Expenses and benefits are among the areas HMRC reviews in an employer compliance check, and the taxi log is the evidence the exemption depends on.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.