Summary. Workplace parking tax exempts employer-provided parking “at or near” the workplace from being a taxable benefit. HMRC guidelines consider reasonable walking distance as “near.” The exemption includes all employer-incurred costs but not parking fines. It applies regardless of actual usage, even for leisure or by family members, as long as it’s primarily for employee use.
There is a lot to know about workplace parking tax, and here at Thomas Nock Martin, we can certainly help. Workplace parking refers to a parking space for a car, van, motor, or other cycle, located at or near the workplace. HMRC’s guidelines suggest interpreting ‘near’ reasonably, thus covering a public car parking space within walking distance of your company’s workplace. But is car parking at work a taxable benefit? The parking space tax rules state there is no income tax liability where parking is provided “at or near” their workplace, directly or indirectly by payment/reimbursement. Workplace parking is defined as such.
“At or Near” the Workplace
“At or near” a workplace isn’t defined in the rules. But, according to HMRC’s guidance, inspectors should allow exemption in any case where parking is within reasonable distance from the place of work. “Having regard to the nature of locality” and not to “deny the exemption simply because there is a car park nearer to the place of work”.
What is covered by the exemption?
The exemption covers all costs incurred by the employer, by providing the parking including any charges levied by the council. However, this does not extend to parking fines (although not expressly mentioned).
Who does this apply to?
An employer does not have to provide car parking spaces for everyone for the exemption to apply. Exempt parking could be provided for senior employees and directors only, and that would be okay.
What about weekend use?
A few years ago HMRC suggested that they might start taxing car parking spaces, making all employer-paid-for parking a taxable perk. Fortunately, this never came to fruition. Therefore, providing parking spaces for your workers isn’t taxable or liable to NI. There is nothing in the tax law explicitly, or by implication, which suggests the parking space must actually be used by an employee or director to park for work. It’s possible to come to work by a different mode of transport (bike), and use the space at weekends for leisure. It would be very difficult for HMRC to quantify the taxable benefit in such circumstances. This means the exemption applies for all use of a parking space, not just for purposes of work.
What about use by family members?
In theory, use of the car parking space by other family members or friends could incur a car park tax in the form of a taxable benefit. You can list two different registration numbers on the parking permit without violating any rules if you use more than one car for work.
How does workplace parking tax work when parking further away from work?
If you pay or reimburse a director or employee for parking, that isn’t at or near their normal place of work, the exemption for workplace parking tax doesn’t apply. For example, parking at a station so that the employee can catch a train to their workplace. However, if business-related purposes require the parking, then the usual rules apply.
Our experts at Thomas Nock Martin know how hard it is to find good, quality information about workplace parking tax that is easy to understand. That’s why we have created these handy guides to tell you everything you need to know.
Our aim is to make life easier for our clients, and that is why we want to share our expertise with you. For more information on workplace parking tax, you can call our friendly team on 01384 261300 – for business tax help you can trust. Or, look through our website for more helpful information.
If you have found the blog helpful, you may wish to read our previous blog on Capital Gains Tax.