Are parking places provided near the place of work a taxable benefit?

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Section 237 of the Income Tax (Earnings and Pensions) Act 2003 provides a comprehensive tax exemption applies for "workplace" parking. This covers parking places that are provided for cars, motor cycles and bicycles, "at or near" the employee's workplace.

The term "at or near" is not defined. HMRC accepts that a parking place is near the workplace if it is within a reasonable distance from the place of work having regard to the nature of the locality, even if there is a nearer car park.

The exemption is all inclusive; it does not matter how the parking place is provided. There is nothing to report even if the employee's costs are reimbursed, or the employer pays the employee's parking bill direct to the provider, or if a voucher or token is provided to obtain the parking facilities.

Note that the exemption does not apply to parking provided for members of the employee's family or household. If parking places are provided at the employee's place of work for family or household members, and they are not entitled to the exemption in their own right, the employee receives a taxable benefit.

If the exemption does not apply

If a parking place is provided near an employee's home, the exemption does not apply. If the employee's home is near the place of work and is used by the employee both while at work and at home, the exemption would also not apply. The benefit would be reported on form P11D, in Section M (on the Class 1A line) if the parking place is provided under a contract between the employer and the provider. The amount to be reported is what it costs the employer to provide the benefit for each employee.

If the cost of the non-exempt parking is incurred by the employee rather than being contracted for and paid by the employer, the amount paid by the employer is reported in

• Section B if the employer settles the personal liabilities of the employee direct to the provider
  
  
• Section C if the employer provides vouchers to obtain the benefit
  
  
• reported in Section N if the employee's expenses are reimbursed.

No tax liability is incurred by any lower-paid employees who are provided with non-exempt parking places by the employer.

NICs liabilities

Where the exemption does not apply,

• a liability for Class 1 NICs arises if the costs of parking places are incurred by the employee and those expenses are reimbursed, or a non-cash voucher or a credit card is used to obtain the benefits, or the employee's bills are settled by the employer.
  
  
• a liability for Class 1A NICs arises if the employer provides the benefit and it is reported in Section M.

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