NIM05635 Class 1 NICs: Expenses and allowances: Congestion Charges

Durham introduced a congestion charge from 1 October 2002 followed by London on 17 February 2003. Other places with heavy city centre congestion may do likewise in the future. Charges operate if a motor vehicle is kept on a road in the charging zone during the hours the scheme operates.

Congestion charge paid or reimbursed by an employer

If an employee drives or keeps a vehicle on a public road in the specified zone, a congestion charge is due. The treatment for NIC depends upon who owns the vehicle:

• If the charge is incurred by a vehicle registered solely in the employers name and the employer pays the charge (or reimburses the employee for the payment) there is no tax consequence (and therefore no benefit consequence for NIC) upon the employee
• If the charge is incurred by a private vehicle registered in the employees name and the employer either pays the charge to the relevant authority or reimburses the employee the amount paid, then such monies are earnings of the employee liable to Class 1 NIC

Where a late payment surcharge is applied, the treatment of any monies paid by the employer is treated in the same way as the basic charge.

Penalty for non-payment of the congestion charge

If the congestion charge (and any surcharge) are not paid, the authorities may issue a penalty notice. The treatment of these payments where made by the employer also depends upon who owns the vehicle:

• If the penalty for non-payment is incurred upon a vehicle registered solely in the employers name and the employer pays the penalty (or reimburses the employee who might have paid the penalty on behalf of the employer) there is no tax consequence (and therefore no benefit consequence for NIC) upon the employee
• If the penalty for non-payment is incurred upon a private vehicle registered in the employees name and the employer either pays the penalty to the relevant authority or reimburses the employee the amount paid, the employee is simply meeting a liability of the employee. The amount paid or reimbursed is earnings liable to Class 1 NIC.

Work at a temporary location

Where a congestion charge is incurred in the course of a business journey that is not ordinary commuting or would not otherwise be incurred in home to work travel, such an expense may fall to be reimbursed in accordance with normal travel and subsistence rules. See also NIM05620 above