"Would your employer get that? Clearly not." - depends who ran the company: some of the people answering and commenting here would probably claim it ;-). And to be fair, if the employer paid worker's compensation to the employee for the injury then it might even be reasonable for them to take the compensation paid by the rail company, to offset that. At least if it was less than the worker's comp.

This feels like it hinges on the definition of "compensation for the traveler's disruption". If a company paid me $100 to take a trip (up front) and then I submitted my expenses with a recipe for $75, the company would deduct $25. Though, I don't live in the EU or UK.

Or look at it slightly differently: if the rail company had no statutory obligation to pay cash for delays, but instead gave everyone a free bottle of water, does the bottle of water belong to the ticket-purchaser and do you need to (a) tell your employer about it; (b) seek their permission to drink it? I hope clearly not, if only because a bottle of water is not financially material, but then it's a matter of the cash value of what you're given. In this case it was money, and that fact is the only thing making it unclear whether it was given to the passenger or the ticket-purchaser.

Make that a free $25 lunch instead of a bottle of water.

@Barmar I guess you would, because the company has paid for that accommodation.

I think even according to the "it's the company being compensated not the passenger" formulation, the company would be given the hotel room by the rail company and then would permit me to sleep it in. Or else my resignation would be in their inbox first thing Sunday morning. What I must do, though, is offer the CEO first refusal on any mini-toiletries I take when I leave.

is this compensation actually taxable?

Except the company is reimbursing for ACTUAL expenses. A reduction of expenses means the company should have less to reimburse. Pocketing/stealing a travel reimbursement would be no different than submitting phony receipts for reimbursement by some odd belief that a hypothetical scenario entitles you to that money. Claiming phony expenses would get you fired. Not telling the company that the travel they reimbursed wound up being a lesser amount is making a phony claim about the expenses.

@PoloHoleSet The money is spent already, I would expect in all cases this will occur. Compensation for delay is not a refund, it is compensation. If I suffer the delay, I get the compensation. If I win a Nobel prize because of my work at a university, does the university get the money because the work was done on company time?

Generally agree, though As the company has suffered no loss is true in this specific case (On the way back...) but may be false. IMO it still wouldn't matter, but complicates things.

Instead of stating "I disagree with the above answers", consider editing and stating which answers because the order of the answers may not be the same on different sorting and time (you posted this answer while there had been already 5 existing answers, but currently this answer is on the 2nd based on highest scoring; 84 vs 55 vs 28), or just remove it.

@lalala: in terms of OP's income tax, I don't think so, because the nature of a compensation for damage is to compensate a loss. VAT is a different story, but that's for the railway company to wrap their head around, and also their profit suffers which has tax consequences ;-)

@GregoryCurrie: here in Germany, if you are "washed ashore" on some station on your way and there is no connection until the next day, the railway pays for that hotel room (and in turn tells you which hotel to use).

Here's the corresponding EU directive for railway transport: eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:l24003

"Money is spent already" - completely irrelevant and tortured logic - that's true if the customer was spending from their own pocket. Does that mean the customer shouldn't accept a rebate or credit? And any rebates is money reclaimed, which would make it money retroactively UNSPENT, that they are owed. It's THEIR money being refunded.

@Barmar - I'd be happy to play that one either way. If I owe them the cost of the room, they'll be paying me overtime for the time spent away from home. If I don't pay for the room, they don't pay me to occupy it. Either way - the whole exercise is costing them money, not me.