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HMRC internal manual

Employment Income Manual

Employment income: garage allowances

Section 62 ITEPA 2003

Where an employer requires an employee to rent a garage for a car or van belonging to the employer, any reimbursement by the employer of the rent paid does not count as “earnings” within Section 62 ITEPA 2003.

But an allowance paid to an employee for garaging the car or van in the employee’s own garage does count as earnings (see generally EIM00520 onwards). PAYE should be applied (Beecham Group Ltd v Fair, (57TC 733)). This will be the case whether or not the garage forms part of, or is attached to, the employee’s residence.

Where the employer claims the payment is a rent chargeable on the employee as Property Income , the case should be dealt with by an Inspector (Ad Appendix No 3). The claim will not succeed unless the employer can show he has taken a lease of (or a licence in respect of) the employee’s garage.