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  • Expenses and benefits A to Z

Car parking - charges

This guide explains your tax and National Insurance contributions (NICs) obligations if you pay or reimburse car parking charges incurred by an employee.

On this page:

Charges for parking at or near the workplace

Definitions or restrictions

You cover parking costs incurred by an employee at or near your workplace. The same rules apply whether you reimburse the costs to your employee or pay the supplier directly.

What to report, what to pay

You have:

  • no reporting requirements
  • no tax or NICs to pay

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Charges incurred on a business journey

Definitions or restrictions

You cover parking costs incurred by an employee while on a business journey.

Only two categories of journey count as business journeys:

  • journeys forming part of an employee's employment duties (such as journeys between appointments by a service engineer)
  • journeys related to an employee's attendance at a temporary workplace

The same rules apply whether you reimburse the parking charges to your employee or pay the supplier directly.

What to report, what to pay

For employees earning at a rate of less than £8,500 per year you have:

  • no reporting requirements
  • no tax or NICs to pay

For company directors or employees earning at a rate of £8,500 or more per year:

  • report on form P11D - section N - unless you have a dispensation that covers these charges
  • you have no tax or NICs to pay

How a dispensation can reduce your reporting requirements

Work out the value to use

The value to use is the full cost to you of covering the parking charges.

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Other car parking charges

Definitions or restrictions

You pay for or reimburse parking charges incurred in any way other than at or near your workplace or on a business journey.

What to report, what to pay

The rules differ depending on precisely how you cover these parking charges.

If you have a contract with a parking provider and you pay them directly:

  • for employees earning at a rate of less than £8,500 per year there are no reporting requirements and you have no tax or NICs to pay
  • for company directors or employees earning at a rate of £8,500 or more per year report on form P11D - section M
  • for company directors or employees earning at a rate of £8,500 or more per year pay Class 1A NICs on the value of the benefit

If the employee has a contract with a parking provider and you pay them directly:

  • for employees earning at a rate of less than £8,500 per year report on form P9D - section A(2)
  • for company directors or employees earning at a rate of £8,500 or more per year report on form P11D - section N
  • for all employees, regardless of earnings, add the value of what you pay for parking to their other earnings and deduct and pay Class 1 NICs (but not PAYE tax) on the value of the benefit using your usual payroll procedures

If you provide an employee with money to pay for parking charges - either by reimbursing their parking costs or providing an allowance to cover their parking costs - then it counts as earnings and you must:

  • add it to your employee’s other earnings
  • deduct and pay PAYE tax and Class 1 NICs using your usual payroll procedures

Work out the value to use

The value to use is the full cost to you of covering the parking charges.

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Where to report – understanding the £8,500 threshold

It’s important to choose correctly between forms P11D and P9D for each employee. The form to use depends on the whether the employee is a director of your company and on whether their earnings are above or below an annual rate of £8,500. For more information – including details of what’s included in the £8,500 threshold - follow the link below.

End-of-year forms at a glance

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Technical guidance

EIM01030: car parking facilities at or near the employee’s workplace

NIM05625: Class 1 NICs - parking fees incurred at the permanent workplace

EIM31820: Travel expenses - incidental costs

NIM05620: Class 1 NICs - parking fees incurred in connection with business travel

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