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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1 NICs: Expenses and allowances: Car, motor cycle and cycle parking fees: Parking fees incurred at the permanent workplace

Regulation 25 and paragraph 3 of Part V and paragraph 8 of Part VIII of Schedule 3 to the Social Security (Contributions) Regulations 2001

Situation prior to 6 April 2001

Prior to 6 April 2001 liability for NICs on parking fees incurred at an employee’s permanent workplace depended on how the parking was arranged.

If employees made their own arrangements and paid any required fees but the employer later refunded these amounts, the fees were liable for the payment of Class 1 NICs. This was because the fees were earnings for the purposes of NICs and were not able to be excluded from liability as business expenses. They were not actually incurred in carrying out the employment but were rather incurred in putting the employee in a position to be able to do his job.

If, alternatively, the employer provided parking spaces - either on company property or by contracting with a car parking company to provide spaces for employees - then no liability for Class 1 NICs arose because the provision of parking was excluded by virtue of regulation 19(1)(d) of the Social Security (Contributions) Regulations 1979 as a payment in kind.

Situation from 6 April 2001

With effect from 6 April 2001 the Social Security (Contributions) Regulations were amended to align the NICs treatment of parking at or near the workplace with the treatment for tax purposes.

As a result, from 6 April 2001 there will be no Class 1 NIC liability in connection with the provision of car or motor cycle parking spaces or facilities for parking cycles at or near the workplace. This will be the case no matter what arrangements are made for parking.

The exclusion will apply if the employer

  • actually provides parking spaces at or near the workplace
  • provides the employee with cash, a credit token or non-cash voucher with which to obtain parking facilities, or
  • reimburses the expenses incurred by the employee in connection with parking at or near the workplace.

Regulation 25 and paragraph 3 of Part 5 and paragraph 8 of Part 8 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004) refer.

No Class 1A NICs are due in relation to parking arrangements. This is because the amounts involved are not subject to a charge to income tax as general earnings and they are not therefore drawn within the scope of the extended Class 1A NICs liability introduced from 6 April 2000. See NIM13000 for guidance on the general principles relating to Class 1A NICs.

See NIM05620 for guidance regarding parking fees incurred in connection with business travel.