Reimbursing Employees Parking and Congestion Charges

No liability to income tax arises where an employee provides workplace parking for an employee. This covers parking at or near the employee’s place of work and is allowable for tax purposes whether the cost is met directly by the employer or reimbursed to the employee.

The treatment of costs incurred as a result of the congestion charge is dependent on whether it was incurred whilst on business travel, in which case the payment is tax and National Insurance free, or whether they were incurred during the employee’s ordinary travel from home to work. If so, the payment is subject to Tax and National Insurance through the payroll.

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.