The Treasury has issued an update regarding tax changes that could affect UK air travel, impacting major airlines such as Ryanair, EasyJet, TUI, and Jet2. The ministerial response follows significant concerns raised about the current system, which campaigners have branded as "completely unfair."
Petition Sparks Government Response
The Treasury responded to a parliamentary petition that garnered over 10,000 signatures, calling for a review of scale rate expenses paid to employees who travel outside the UK, including airline cabin crew. Scale rate payments involve employers providing a fixed cash amount to cover business expenses like travel and meals, eliminating the need for receipts. The petition urged ministers to "review and increase" these rates, arguing they do not reflect real costs for workers abroad. It stated: "We feel the rates are not reflective of the real costs for people whose work takes them abroad, and that the way they are put into blocks of 5/10 or 24 hour blocks is completely unfair. We want these rates to be reviewed by HMRC so they are up to date with the current cost of living."
Issues with Time Blocks
The current system uses different rates based on the duration of expenses: more than five hours but less than 10 hours, more than 10 hours but less than 24 hours, and more than 24 hours. The petition highlights a flaw: "If a flight is delayed by an hour, this can mean dropping from the 24 hour payment down to the 10 hour payment, so essentially working 12 hours without a payment. This is a common occurrence in air travel, hence crew being penalised for something out of their control." The petition calls for a wider range of rates and time blocks to prevent such penalties. Over 11,000 people have supported the petition at the time of writing, triggering the government's obligation to respond.
Government Response
The Treasury has now issued a reply. On potential changes to HMRC policies, it stated: "The Government keeps all taxes under review as part of the policy making process. Any decisions on future changes in this area will be taken in the context of the wider public finances." The Treasury also explained the rationale behind the current system: "Overseas scale rates (OSR) allow employers to reimburse overseas travel costs without receipts. Where costs exceed rates, receipts can be used. The Government keeps OSR under review. The Government recognises that employees who travel overseas for work, including cabin crew, incur additional costs and that employers need practical ways to reimburse those costs fairly. HMRC's overseas scale rate system is intended to support this by providing a consistent, evidence based framework for tax free subsistence payments where employees are travelling abroad as part of their role."
Bespoke Rates as an Alternative
The response further explained that scale rates are not intended to reflect every individual's expenses but provide "standard set of benchmark amounts." Employers are not required to use HMRC's published rates if they deem them inappropriate; they can agree bespoke rates with HMRC based on actual cost evidence or reimburse actual costs with receipts. "These alternatives allow employers greater flexibility where working patterns, disruption or sector specific issues mean the standard rates are not appropriate." The petition remains open for signatures on the parliamentary website.
