VAT on Parking

Parking encompasses various facilities, such as on-street, off-street, privately run, and council-run parking. Payment is often required, especially in busy urban areas.

As parking services generate revenue, it's important to ensure the correct VAT treatment and understand that different parking options may attract different VAT rates. VAT can be complex, so let's delve into the details of VAT on parking to help you understand it better.

Please be aware that this blog is for the benefit of parking service operators, not drivers who pay for the service.

VAT and On-Street Parking

On-street parking, where cars are parked on the roadside in designated areas, can only be granted by a local authority. This means HMRC treats it as a non-business activity and does not subject it to VAT.

VAT and Off-Street Parking

For off-street parking services, such as car parks (including multi-storey), VAT is charged at the standard rate (20%). This applies whether a local authority or a private company provides the parking service.

Examples

VAT and Airport Parking

Travel is mostly zero-rated for VAT; however, as stated above, off-street car parking is typically standard-rated. Where off-street parking is offered at airports, it is also subject to VAT at the standard rate, as long as the provider is VAT registered.

VAT and Train Station Parking

The payment for parking at train stations is treated as a separate activity from the train travel itself. This means the parking is treated the same way as any other off-street parking and is subject to VAT at the standard rate.

VAT and Parking at Country parks

Parking in public country parks is not considered the same as off-street parking.

Off-street parking is exclusively used for vehicle parking. However, country parks are used for leisure purposes and allow car parking to occur at the park.

The VAT treatment for parking at country parks depends on who owns the property. If the park is public, there will be no VAT on any parking fee. But if a private company owns the park and charges for parking, this is standard-rated.

Where there is no fee for parking in a private park, there is no supply for VAT purposes.

Fines and Penalties

When drivers incur a parking fine or penalty, the VAT treatment of such fines can be complicated.

A true fine or penalty is a separate payment from the standard charge for the main supply. This type of payment is outside the scope of VAT since no supply has been made by the recipient of the payment.

Where the fine is there to penalise an unlawful act, for instance, parking on yellow lines or a local authority supplies the parking, again there has been no supply and any charge made is outside the scope of VAT.

Where additional charges are incurred for a vehicle being parked for longer than the time paid for, for which additional consideration is payable, the liability of this consideration follows that of the original supply And is subject to VAT at the standard rate if the parking fee is standard rated.

On the other hand, when a car park operator makes a clear offer of parking within specific terms and conditions, the fines for breaching the terms constitute penalties for breaching the contract it is outside the scope of VAT.

In summary

Where on-road parking is provided, it is outside the scope of VAT. However, off-street parking is standard-rated, regardless of who provides the parking service.

Parking provided by an independent company at country parks is subject to VAT at the standard rate unless the private company does not charge for parking. In this case, there is no supply for VAT purposes.

The VAT incurred on parking does not have to have to be detailed on a parking ticket, as a breakdown of the VAT is not required for values under £100.