Background
Where your employer provides you with a rented space near their premises, there could be a tax consequence for you.
With the cost of parking in and around towns and cities ever increasing, some firms offer to pay for car park spaces for employees. Whilst in most cases workplace parking is an exempt perk, there are some situations it can result in a taxable benefit.
The Legislation
The legislation states a parking space paid for by the employer, ‘at or near’ the place of work, is not a taxable benefit. ‘At or near’ is not defined by HMRC however, their guidance says an exemption should be given where parking is provided within a reasonable distance from the workplace. HMRC must also consider the nature of the local area and must not reject the exemption simply because a different car park is closer.
Putting the guidance into practice, an employer may look for the cheapest parking spaces within a reasonable distance to the workplace, even if a dearer one is closer.
Payment of the fees can be done either by paying the provider direct or through a reimbursement. Finally, unlike most benefits, it can be provided to selected employees such at the senior staff.
The Fine Print
Should the space be used for non-work purposes, again an exemption applies if the employer pays the provider direct. The legislation is silent on the private use of the spaces and the exemption is for all use of the parking space and not just for work. This will not apply to reimbursements of daily car park tickets as the expense will need to be specifically for work.
Where an employer pays or reimburses an employee for parking and it isn’t at or near their normal place of work, the exemption doesn’t apply. For example, parking at a station so that the employee can catch a train to their workplace.
