Tax treatment of a parking space paid by your company
We've previously discussed the tax treatment of parking fines paid for by your company. In this blog we'll discuss the tax treatment of a parking space paid by your company.
You've decided to get your company to pay for a car parking space at the local multi-storey car park. This is because the price of an annual season ticket is less expensive than buying five daily tickets. However you haven't considered the tax treatment of a parking space paid by your company. Will this create a tax charge?
Tax treatment of a parking space paid by your company - private use
Generally where your company provides you with a season ticket which might involve some personal use then a taxable benefit arises. However, if private use is minimal then no tax charge potentially arises (though see below).
Tax treatment of a parking space paid by your company - HMRC's view
The tax rules state there is no income tax liability where parking is provided directly or indirectly by payment/reimbursement and it is defined as workplace parking.
Workplace parking is defined as parking space for a car, van, motor or other cycle at or near the workplace. HMRC's own guidance indicates that 'near' should be interpreted reasonably. Therefore a public car parking space within walking distance of your company's place of work would be covered.
What about weekend use?
There is nothing in the tax law explicitly or by implication which suggests the the parking space must actually be used by an employee or director to park for work. Potentially you could come to work by a different mode of transport (bike) and use the space at weekends for shopping. The reality is that it might be difficult for HMRC to quantify the taxable benefit in such circumstances.
Tax treatment of a parking space paid by your company - use by family members
However be aware that if the parking space is capable of and is in fact used by other family members or friends then theoretically a taxable benefit could arise. That said having two different registration numbers listed on the parking permit is not conclusive evidence of this. For instance, there may be circumstances where it's necessary to bring your spouse's car into work instead.
What if there's more than one parking space near your place of work?
If there are several car parks in the vicinity and you choose one that's halfway between the office and town centre within walking distance of both this isn't necessarily an issue. You only need to worry where private motives have dictated your choice of car park.
For example you and your spouse travel to work together. Instead of using the car park nearest to your workplace you choose the one nearest to your spouses train station.
For more useful information, check out our Ebooks here.
And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].