Park and Ride - Taxable Benefit??

Park and Ride - Taxable Benefit??

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Has anyone had any dealings with HMRC on the subject of whether a contribution by an employer to an employee towards the cost of a Park and Ride Service is a taxable benefit?

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By mrme89
05th Dec 2014 11:57

Is the park and ride to the normal place of work, or not? 

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Replying to penelope pitstop:
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By Graham No.14
05th Dec 2014 12:12

The parking facility is out of town and the bus will drop the employee(s) off close to their place of work.

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By Gem7321
05th Dec 2014 12:01

Is it available to all employees?

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Replying to S-S:
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By Graham No.14
05th Dec 2014 12:13

 

 

Yes, it is available to all employees.

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By mrme89
05th Dec 2014 12:16

http://www.hmrc.gov.uk

Too busy to reply fully, but see here as a starting point.

http://www.hmrc.gov.uk/manuals/eimanual/eim21855.htm

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By MJShone
05th Dec 2014 12:17

Assuming this is for travel to work...

Assuming this is for travel to work, the exemption (s237 ITEPA 2003) applies to parking provided "at or near the employee's workplace".

So the question is "what does "near" mean?" The Revenue's manuals (EIM 21685) say "The words ‘at or near’ are not defined in the Act. A rigid approach is not required. Apply the exemption in any case where parking facilities can be said to be within a reasonable distance from the place of work having regard to the nature of the locality. Do not deny the exemption simply because there is a car park nearer to the place of work."

I think you might struggle with park and ride - is the car park "near" the place of work ie is it a reaosnable distance from the place of work having regard to the nature of the  locality? I can see some circumstances where that might be the case eg where the employee works at some sort of secure facility in the middle of the desert and has to get the works bus from a company car pound miles away (getting a bit carried away here) but not where the employee parks out side the city and gets the park and ride in.

However, what about the "works" bus exemption in s242 and/or s243 ITEPA???? I suspect that would only get you as far as an exemption for the cost of the bus, not the parking. However, if the cost of the park and ride to the public is only the bus fare, then you'd get the right (and congestion friendly) result.

 

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By MJShone
05th Dec 2014 12:40

I need to learn to type faster!

There was only one reply on here when I started the above reply!

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By neiltonks
05th Dec 2014 13:40

Car park

Many park and ride operations are set up in such a way that a fee is paid to park the car and the bus is then free (to stop people taking advantage of a free car park but not using the bus!) If this is the case in your scenario, you're relying on the exemption for parking 'at or near' the place of work and this means trying to persuade HMRC that it's near enough.

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Euan's picture
By Euan MacLennan
05th Dec 2014 14:07

I think it is allowable

EIM21685 says :

Apply the exemption in any case where parking facilities can be said to be within a reasonable distance from the place of work having regard to the nature of the locality.

The terminology is indicative of a relaxed approach by HMRC and it seems to me that "having regard to the nature of the locality" would cover the circumstance where the local council has provided Park & Ride facilities to avoid traffic congestion in the immediate vicinity of the workplace.  It would help if the employer buys a season ticket rather than reimbursing each employee out of petty cash.

However, if the "contribution" mentioned by the OP is simply a round sum allowance, it would be taxable under PAYE through the payroll.

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By Steve Kesby
05th Dec 2014 14:11

I have this t-shirt

The first point is that it is not a case of whether or not it is a taxable benefit. A contribution by an employer to an employee's park and ride costs for getting to work are taxable as pay, unless one of the exemptions apply.

There are 4 park and ride situations around the UK:

free car park, pay for the bus,free bus, pay for the car park,pay for car park, plus pay for the bus separately, andpay a single fee for car park and bus.

The bus element is probably easiest to deal with first.

A works transport service within the s. 242 has a specific definition that means it must be used only by employees (mainly for qualifying journeys) and their children. That's unlikely to apply to the ride part of a park and ride, and the benefit must be generally available.

The support for public buses exemption in section 243, as per the above link to EIM21855, is an even higher bar. Various local authorities (who do, as a matter of fact, subsidise local bus provision) have tried salary sacrifice schemes to this end.

HMRC's view is that (i) financial assistance must, actually be provided (buying a ticket/season ticket is not financial assistance in their view), (ii) the financial assistance must relate to a specific bus route, (iii) the employees must receive the right to travel as a direct result of the financial assistance (not because of a ticket also being bought), and (iv) the right to travel must be only for that same specific route. It is an exemption that can never apply in practice in HMRC's eyes. Again it must be available to employees generally.

Neither of those help the OP though, because they only exempt benefits, not the provision of a cash contribution to buy the service.

In the case of 2 above and the car park in 3, the parking provision exemption in section 237 might apply. It covers reimbursements as well as provision as a benefit, and it does not need to be available to employees generally.

The parking must, however, be near to the workplace.

I have asked HMRC about this for an employer where there were various park and ride sites (falling within 3 above) at distances of between 1.25 and 4 miles from the city centre, quoting EIM21685.

They told me that near means within walking distance, which they thought was up to half a mile, and so they were of the view that the exemption did not apply.

I don't agree though. Near means something different from nearbyNear is a relative term.

Ask somebody in Sydney to name a city near London, thy won't mention St Albans, Oxford or Cambridge. They are just as likely to name Manchester or possibly even Paris.

In my view if an employee has driven 25 miles, parked their car and sat on a bus for a further 10 minutes to get to their office, then they have parked near to their workplace. Just don't hold your breath.

EDIT: Crossed with Euan.

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