Taxsaver Commuter Ticket Scheme
The Taxsaver Commuter Ticket Scheme is designed to help reduce the cost for workers using public transport. The Taxsaver scheme is not limited to State-owned public transport and can include private operators (if they are approved transport providers).
Taxsaver helps to encourage workers to avail of public transport and to reduce traffic congestion. You can talk to your employer about participating in the scheme and your employer will then apply for your ticket.
The Taxsaver scheme is operated (in conjunction with the Revenue Commissioners) by:
- Dublin Bus
- Bus Éireann
- Irish Rail
- Approved transport providers
Employers provide employees (including company directors) with Taxsaver bus, rail and Luas commuter tickets, while saving on employer PRSI payments. Employees benefit from reduced income tax, PRSI and Universal Social Charge (USC) payments.
Employees can receive tickets either as part of their salary package (salary sacrifice), in lieu of an annual cash bonus, or as a benefit-in-kind. Taxsaver tickets are not subject to tax, PRSI or USC. Employees only have to pay tax, PRSI and USC on the "money" portion of their salary. Employer PRSI is also calculated on the "money" portion of the employee's salary.
According to Dublin Bus and Irish Rail, employers can make PRSI savings of up to 10.75% and employees can save between 31% and 52% of travel costs as a result of tax, PRSI and USC savings by using a TaxSaver ticket.
Taxsaver tickets and COVID-19
Refunds for Taxsaver tickets expired on the 31 December 2020.
Who can apply for a Taxsaver ticket?
All employees of companies (including company directors) that choose to participate in the TaxSaver scheme are eligible, as long as the commuter tickets are applied for and provided by the employer.
Contract between employer and employee
Employees who want to take part in the TaxSaver scheme first select the ticket type that best suits their needs. Employers and employees then sign a contract setting out the terms of the Taxsaver scheme. The Taxsaver contract (between the employer and employee) must be agreed and signed before the employer applies for a Taxsaver ticket. It is important that both parties review the conditions of the contract. For example, the contract should state what happens if an employee leaves the company before the ticket expiry date.
A signed Taxsaver contract is usually binding for 12 months. If, for example, an employee goes on holiday during that time, they cannot give back the ticket, or get a refund for the time spent away and reclaim the ticket upon returning.
If an employee returns a ticket to an employer before the 12 months is up, they cannot re-join the scheme again until the 12-month period has expired. However, the company may get a refund for the portion of the year not used by the employee.
Tickets are strictly non-transferable and cannot be exchanged for cash benefits.
Once a contract between the employer and employee has been signed, the employer applies the tax conditions set out below, and applies to the relevant transport provider. Individual applications from employees are not allowed.
The terms and conditions of employment must be effectively altered to refer to the Taxsaver ticket (to highlight that you are exercising a choice of benefit instead of salary). The alteration must not be retrospective and must be evidenced in writing.
There must be no entitlement to exchange the benefit for cash.
The choice exercised (to accept benefit instead of cash) cannot be made more than once a year and then only with the consent of the employer.
Taxsaver payment options
Employees can participate in the scheme in one of three ways:
1. Salary sacrifice
By choosing salary sacrifice, employees can receive TaxSaver commuter tickets as part of their basic salary package.
For example, if the annual cost of a bus/rail ticket is €1,040 and an employee is earning €20,000 per annum. Instead of the employee buying the ticket themselves for €1,040, the employee agrees a salary sacrifice of €20 per week for the cost of the annual ticket. This equates to €1,040 for the year in which the employer pays for the ticket. The employee will not be charged tax, PRSI, or USC on the portion of salary sacrificed. Therefore the tax, PRSI and USC are now calculated on the employee's salary minus the salary sacrificed (€18,860).
The employer will claim an expense for salary paid to employees. In the above example, without salary sacrifice, the employer will pay €20,000 in salary and claim an expense of €20,000 salary (plus the employer PRSI). If an assumed 10.75% rate applies, then the employer PRSI would be €2,150. By using salary sacrifice, the employer will pay and claim €18,960 salary (plus employer PRSI). This comes to €2,030.20 (this is where the employer saves) plus a deduction of €1,040 (the cost of the ticket). The cost of the ticket is now regarded as an allowable expense for the purposes of Section 118 (5A) of the Tax Consolidation Act 1997 as amended by Section 8 of the Finance Act 2005.
2. Cash Bonus
As an alternative to salary sacrifice, an employer can offer employees TaxSaver commuter tickets instead of a cash bonus. As cash bonuses are taxed and commuter tickets are not, tickets provide better value to employees than a cash bonus.
A third way for employers and employees to benefit from the scheme is for employers to offer employees TaxSaver commuter tickets as a benefit-in-kind. For example, instead of a parking space at work, or as an incentive for an employee to remain with the company.
Benefits of participation
- Employers can save up to 10.75% on PRSI costs by providing staff with Taxsaver commuter tickets.
- Employees can save up to 52% of travel costs as a result of tax, PRSI and USC savings.
- Employees no longer need to queue for bus or rail tickets.
- Prepaid tickets are cheaper than paying cash. For example, the cash value of annual bus and rail tickets runs out after eight months, which means that for the last four months, a ticket holder is effectively travelling for free. On ‘Rail Point-to-Point’ tickets, a ticket holder is effectively travelling free for the last two months.
It costs employers and employees nothing to join the scheme itself.
Taxsaver ticket types and prices
There are several different types of monthly and annual tickets available. Employees should choose the type of ticket that best suits their travelling habits (bearing in mind that the ticket can also be used for personal travel outside of office hours). Annual tickets provide better value, however monthly tickets might be more practical for companies with a high staff turnover.
Monthly tickets are valid for one calendar month and can be purchased up to two weeks in advance. Annual tickets are valid for one year from the first day of any month and can be purchased anytime.
You can find more information on annual and monthly commuter tickets on Taxsaver.ie and from the following websites:
Information on commuter tickets may also be available from approved private operators.
How to apply
Applying for the scheme
- Employees choose the TaxSaver commuter ticket that best suits their needs, bearing in mind that commuter tickets can be used outside office hours and for leisure purposes.
- The employer and employees sign a contract, subject to the rules of the scheme.
- The employer applies the required Tax Conditions and registers with the public transport provider.
- The employer makes a group application on behalf of employees by post, e-mail or online.
- Companies must keep a receipt of purchases and a copy of the ticket for their tax records.
Where to apply
Information on where to apply is available from the following websites:
Information may also be available on the websites of approved private operators.