The TaxBuzz Blog ran from 2007-2001 and contained tax commentary, ideas, insights and news from the Tax Advice Network, the UK's premier network of vetted, independent tax advisers. The replacement blog is part of the Knowledge Bank on the Tax Advice Network website itself.
Monday, September 29, 2008
Tax charge on parking spaces at your place of work
I seem to be experiencing deja vu all over again ;-)
In September 2007 the papers were full of reports along the lines that:
The story remains pretty much the same in that Nottingham City Council aims to become the first authority to introduce the Workplace Parking Levy (WPL), with at least eight other councils ready to follow its lead. For each liable parking space, Nottingham City Council plans to charge an annual levy of £185, rising to £350 within four years of its planned implementation in 2010.
If memory serves however this would not be the first time that workers would be 'taxed' for driving to and from work.
A charge was introduced in the early 1980's I think but workplace parking was then exempted from taxation as a benefit in kind in the 1988 Budget, because it was deemed too difficult and complex for employers and the Inland Revenue to assess liability. Since then there has been no such charge.
Any payment or reimbursement of expenses in connection with the provision for, or use by, an employee of a car parking space at or near the employee’s workplace is not chargeable to tax. Equally the provision of workplace parking as a benefit, or by way of vouchers or credit tokens, is also exempt from tax. This is in stark contrast to the position as regards many other benefits provided by employers. In particular all other costs of traveling to and from work are treated as a taxable benefit if paid or reimbursed by an employer.
Before the last standard tax charge for workplace parking was implemented I recall dealing with a letter from (what was then) the Inland Revenue. The Inspector was arguing that the provision of a car parking space on office premises was a taxable benefit in kind. We responded that there was no cost to the employer in this regard but the Inspector argued to the contrary. His view was that rent and rates etc needed to be apportioned to arrive at the 'cost to the employer'. I recall that we didn't concede and that the introduction of a standard scale benefit charge was introduced shortly thereafter (and then abolished in 1988).
The element of this issue that always amused me may be apocryphal. Remember that senior officials of the Inland Revenue used to be allowed to park their cars at their Central London HQ in Somerset House. Could the potential imposition of a benefit in kind charge on those responsible for creating policy and enforcing the law have had an impact on their desire to avoid or abolish the benefit in kind charge on workplace parking? And what now of Local Council Officials? I suspect that times have changed and that different views will prevail. What about you?