British Airways has successfully appealed a tax claim from HMRC concerning £5.8m in income tax and national insurance contributions. The dispute centred on whether the costs associated with cabin crew accommodation at London Heathrow Airport were taxable.
The Upper Tribunal ruled in favour of British Airways on Monday, determining that the accommodation provided for cabin crew working back-to-back transatlantic flights was a deductible travel expense. Mr Justice Rajah and Judge Ashley Greenbank stated that the accommodation was “a necessary expense of travel” and not a taxable employee benefit.
This ruling follows 2016 aviation safety regulations that mandated cabin crew to stay in hotels for rest between certain flights. The Tribunal found these accommodation fees were a “necessarily incurred” cost for meeting employment duties, as the crew used the accommodation to rest during their shifts.
HMRC had argued that the accommodation should be classified as ‘general earnings’ for cabin crew, making it subject to income tax and national insurance contributions. An HMRC spokesperson noted the Tribunal's decision and stated they are carefully considering the judgment.