Reimbursing Employees Parking and Congestion Charges

My employer is reimburising me for costs I have incurred for parking and congestion charges whilst on business. Should these reimbursements have been put through the payroll and treated as earnings for PAYE and National Insurance?

1st September 2008

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.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. 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 information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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