You’d like to think that a question as simple as whether you pay VAT on parking would yield a simple and quick answer. Sadly, this isn’t the case due to the different types of parking scenarios and payments that there are.
However, that doesn’t mean you can’t get to the bottom of VAT on parking tickets, charges, and even fines. We’ve outlined what you need to know about car parks and VAT below.
There is VAT on some parking. For example, off-street parking is normally VATable at the standard rate of VAT whereas on-street parking operated by a Local Authority is outside the scope of VAT. All you must do is work out which one applies to you.
And purely for a bit of trivia here are just a few different scenarios for understanding if there is VAT on parking, whether it’s zero-rated, exempt, and details on VAT on parking fines too.
Do you pay VAT for off-street parking?
Charges for parking are normally subject to VAT for off-street parking if the organisation operating the car park is VAT registered.
Following the Court of Appeal judgment in Isle of Wight Council and Others (2014) UKUT 446 (TCC), off-street parking is standard rated, even if supplied by a local authority.
Always check the parking ticket for evidence. If there is a VAT number on the parking ticket the company operating the car park is VAT registered and you can reclaim VAT at the standard rate for off-street parking.
The amount of VAT you pay on parking may not be detailed on the ticket as legally you do not need to provide the breakdown on receipts under the value of £100. That does not mean that there is no VAT to reclaim but you may have to calculate it yourself.
Example
- Car park ticket: £4.00
- Net of VAT (/1.2): £3.33
- VAT: £0.67
Not claiming VAT on business expenses can impact the cash you have in your business and the amount of money you have available to pay yourself through profits. Consider this simple example of claiming missed VAT:
| Purchases in the year | £12,000 |
| VAT | £2,000 |
| Cost to business | £10,000 |
| Additional Cash | £2,000 |
| Additional Profit | £2,000 |
Getting this wrong can add up to a sizeable amount of money across the financial year. It is always best to keep and double-check receipts and invoices for evidence of VAT. This isn’t always easy as there are many exceptions to the rules when it comes to VAT and how it is displayed on receipts and invoices.
Do you pay VAT for on-street parking?
However, on-street parking is operated by the Local Authority and is covered by statute. Because of this, you do not pay VAT on on-street parking charges.
Authorisation for parking on a public highway can only be granted by a local authority. The authority is acting in its capacity as a highway authority using powers provided in the Road Traffic Act 1988 and the Road Traffic Regulations Act 1984.
Therefore, any income from sources such as parking meters, the issue of permits in controlled parking zones and the like is non-business as there is no competition with the private sector.
Is parking VAT exempt or zero-rated?
Zero-rated VAT means that goods are still taxable but charged at 0% so the VAT charge is £0. These transactions should still be entered on your VAT return.
Exempt VAT is where no VAT is charged on the supply. Examples include insurance and postage stamps.
Is on-street parking VAT exempt or zero rated?
As we have identified above on-street parking VAT is outside the scope of VAT which means it should not be entered on a VAT return. It is neither exempt nor zero-rated.
Off-street parking is standard rated so if the operator of the car park is VAT registered you can reclaim the VAT charge.
Do not confuse exempt with zero-rated. Whilst they both may attract a £0 VAT charge, they are different. When entering your parking purchases into your accounting records make sure to use the exempt option instead of zero-rated.
If a charge is outside the scope of VAT like off-street parking it does not go on your VAT return, so you need to choose the appropriate VAT rate. In Xero, for example, this would be the ‘No VAT’ tax rate and in Sage it would be ‘T9’.
Is there VAT on parking fines?
So, we have covered in length the different situations impacting the VAT rate on parking.
Now let us consider for a moment that dreaded moment when you get a parking fine. Does the VAT on parking charge notices follow the same rules?
A true fine or penalty is a separate payment from the standard charge for a supply. This type of payment is outside the scope of VAT since no supply has been made to the recipient of the payment.
If the contract under which car parking is supplied allows for an extension of the original terms, for which additional consideration is payable, the liability of this consideration follows that of the original supply.
However, where a car park operator makes an offer of parking under clear terms and conditions, setting punitive fines for their breach, the fines constitute penalties for breaching the contract, rather than additional consideration for using the facilities. Consequently, they are outside the scope of VAT.
A penalty charge for illegal parking is outside the scope of VAT.
Excess charges not subject to VAT
The penalty charges that will no longer be subject to VAT are those that are levied where a driver is in breach of the terms of the contract with the car park operator. The most common situations where a driver may be in breach of the contract are:
- no parking ticket on display
- underpayment
- overstaying purchased parking time
- returning within a specified time
- parking outside marked bays
- parking in bays set aside for disabled drivers or parents with children
Excess charges subject to VAT
Where the terms and conditions make it clear that the driver can continue to use the facilities after a set period upon payment of a further amount without being in breach of the contract.
For example, no charge for an initial three hours of parking but £70 if that period is exceeded – then the payment will be consideration for use of the facilities and subject to VAT.
Excess charges retained by contractors (VAT on parking charge notices)
Some parking site owners contract out the management and operation of their parking sites and allow the contractor to retain all or part of the penalties collected.
These fees (commonly known as parking charge notices or PCNs) are outside the scope of VAT whether retained by the parking enforcement contractor or passed on to the landowner.
FAQs on car parking VAT
Is there VAT on airport parking?
Most travel is zero-rated for VAT, but car parking tickets are standard-rated.
As we have identified HMRC views that off-street parking is taxable and therefore VAT will be charged at the standard rate of VAT provided the operator of the car park is VAT registered.
Check your receipts for a VAT number to double check you can reclaim the VAT if it is not clearly displayed on any receipts received.
Considering the size of an airport I would think it highly unlikely that an organisation entrusted with operating a car park would not be VAT registered.
Is there VAT on train station parking?
The decision to charge for car parking at a station is a commercial decision for the station operator, as it is for any other commercial car parking provider.
Car parks at stations might be contracted out so they are managed and operated by a contractor. Car parks at Thameslink stations for example are operated by APCOA, who are VAT registered and operating off-street parking. You can receive a VAT receipt by email.
You can expect VAT on train station parking to be standard rated as it will likely be off-street parking and follow the same VAT rules as described above.
Handy Hint: If you’re planning a train journey, there will be no VAT on the ticket except in a few rare exceptions.
Is there VAT on RingGo parking?
Yes, each time you park a printable VAT receipt is created on your RingGo personal pages. This receipt can be printed off at any time for up to two years from the date of the parking itself. You are also able to print a monthly summary record of all parking transactions from your my RingGo personal web pages.
Previously, RingGo would automatically email you with a PDF receipt of your parking session. This resulted in users receiving multiple emails, each with a PDF attachment.
RingGo has now adjusted the automatic email you will receive. You will now receive an email including all the usual information however this email will no longer include a PDF attachment.
There are now two methods available for obtaining your receipt(s), these include;
Option 1 (via RingGo App)
- Login to your RingGo Parking App
- Select “Account” from the bottom navigation bar
- Select “Receipts”
- Click on the receipt(s) you require
Option 2 (via www.myringgo.co.uk)
- Click on the “Website” link in the email to be directed to www.myRingGo.co.uk
- Log into www.myringgo.co.uk via the top navigation bar
- Select “Receipts” in the top navigation bar
- Find your session and click on the “Download” or “Email” options to retrieve your receipt(s)
Do Euro Car Parks charge VAT?
To get a VAT receipt from Euro Car Parks simply use the link below where you can enter your mobile phone number and vehicle registration to get a VAT receipt for car parking.
Conclusion
Who would have thought that something such as VAT on car parking would be so interesting!
Reclaiming VAT on purchases is simple as you will follow the documentation you have received in the form of a receipt or invoice. You reclaim the amount of VAT the supplier has calculated as that is what they have paid to HMRC.
There are exceptions to the rules as always when it comes to HMRC. It is always worth double-checking to avoid falling foul of an exception to the rule.
You cannot rely on a standard way of claiming VAT on parking which differs depending on the way the supply is provided. One size does not fit all – make sure you keep good records to back up any VAT reclaimed.
More small business owner guides…
Car park image via https://pixabay.com/photos/parking-underground-car-park-cars-427955/
Jon has been in business since 1999, and in that time worked with more than 300 small business clients. As well as being an accountant, he is also an early adopter of tech, and has helped small businesses to leverage the power of their computer systems by creating software to automate and simplify accounting tasks.
