Parking And Garaging Rules
The taxation of fines which are paid by employers depends on whether the car is owned by the employer or the employee and whether the penalty notice is fixed to the car or given to the driver.
If the penalty notice is fixed to a car registered solely in the employer’s name and the employer pays the fine, or reimburses the employee, there is no tax consequence for the employee.
In any other situation the payment of the fine by the employer will be taxable, either as earnings, a benefit, or expenses depending upon who owns the car and how the penalty notice is presented.
Any cost incurred by an employer when providing a car parking space at or near an employee’s workplace is not assessable as a benefit in kind, nor is it regarded as earnings.
The exemption applies irrespective of whether the employer provides the car;
to spaces provided for cars, vans, motorcycles and cycles; and to a company’s own car park, a season ticket at a local, public car park, rented garage spaces and even one off parking charges and metered charges.
It is important to note some employers have incorporated workplace parking in their flexible benefit and salary sacrifice programmes, enabling employees to acquire a season ticket at a local public car park in return for a reduction in their gross pay.
As the benefit is not taxable the employee is able to save income tax and NIC on the salary sacrificed without any corresponding liability on the value of the workplace car parking.
Recently, some local authorities have been granted permission by the government to apply workplace parking levies, which are effectively a tax on employers that provide car parking spaces at their premises. There is the possibility these may undermine the tax exemption for workplace parking, but should employers wish to pass on these levies to their employees, salary sacrifice arrangements would enable the employees to obtain income tax and NIC relief on the cost.
If an employer requires an employee to rent a garage for a company car or van, the employee will not be taxed if the employer reimburses the rent because HMRC does not regard the rent as earnings.
On the other hand, if the company car or van is housed in a garage owned by the employee in return for an allowance from the employer, the allowance should be treated as earnings and taxed under PAYE.