Glossary · UK
What is Season Ticket Loan?
An interest-free or low-interest loan from an employer to buy an annual travel season ticket, exempt from tax as a benefit in kind if the total balance stays within HMRC's small loan limit.
Full Definition
A season ticket loan is a benefit some employers offer so staff can buy an annual (or longer) public transport season ticket up front, then repay the employer in instalments through payroll, usually over 10 to 12 months. Because season tickets are often meaningfully cheaper than paying for weekly or monthly tickets separately, the loan can save an employee a real sum over the year even before any tax effect is considered. For tax purposes a season ticket loan is treated like any other employer loan: HMRC applies no benefit-in-kind charge at all provided the combined balance of this loan and any other cheap or interest-free employer loans stays at or below the small loan exemption threshold of GBP 10,000 throughout the tax year. If the combined balance goes above GBP 10,000 at any point, the whole loan becomes taxable and the employer must calculate a benefit using HMRC's official rate of interest, reporting it on a P11D (or payrolling it) and paying Class 1A National Insurance on the value of the benefit. Season ticket loans are common in and around London, where annual Underground, rail and bus season tickets can cost several thousand pounds.