Congestion charges
This guide explains your tax and National Insurance contributions (NICs)
obligations if you cover the cost of congestion charges incurred by
an employee. Your obligations may differ depending on whether the charges
were incurred in a company vehicle or during business or private travel.
On this page:
Company car or van
Definitions or restrictions
You cover the cost of congestion charges incurred by an employee in
a company car or van. The same rules apply:
- whether the charges are incurred on private or business journeys
- whether you pay the charges directly or reimburse your employee
What to report, what to pay
You have:
- no reporting requirements
- no tax or NICs to pay
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Employee’s vehicle: business travel
Definitions or restrictions
You cover the cost of congestion charges incurred by an employee in
their own car or van while on a business journey. There are only two
types of business journey:
- journeys forming part of an employee's employment duties (such
as journeys between appointments by a service engineer or to external
meetings)
- journeys related to an employee's attendance at a temporary workplace
The same rules apply whether you pay the charges directly or you reimburse
your employee.
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
covering this item
- you have no tax or NICs to pay
How a dispensation can
reduce your expenses and benefits reporting
Work out the value to use
The value to use is the amount of the congestion charge.
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Employee’s vehicle: private travel – you pay directly
Definitions or restrictions
An employee incurs congestion charges while on a private journey in
their own car or van, and you pay the charges directly.
All journeys except the following two types count as private:
- journeys forming part of an employee's employment duties (such
as journeys between appointments by a service engineer or to external
meetings)
- journeys related to an employee's attendance at a temporary workplace
What to report, what to pay
For employees earning less than a rate of £8,500 per year:
- report on form P9D - section A(2)
- add the value of the benefit to the employee’s earnings when deducting
and paying Class 1 NICs (but not PAYE tax) through your payroll
For company directors or employees earning at a rate of £8,500 or more
per year:
- report on form P11D - section N
- add the value of the benefit to the employee’s earnings when deducting
and paying Class 1 NICs (but not PAYE tax) through your payroll
Work out the value to use
The value to use is the amount of the congestion charge.
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Employee’s vehicle: private travel – you reimburse
Definitions or restrictions
An employee incurs congestion charges while on a private journey in
their own car or van. They pay the charges and you reimburse them.
All journeys except the following two types count as private:
- journeys forming part of an employee's employment duties (such
as journeys between appointments by a service engineer or to external
meetings)
- journeys related to an employee's attendance at a temporary workplace
What to report, what to pay
The amount you reimburse counts as earnings, so:
- add it to the 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 amount you reimburse to the employee.
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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
EIM21680: The congestion charge
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