Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
Do you have to report congestion charges?
Whether you have to report and pay additional tax and National Insurance when you cover the cost of congestion charges for your employees depends on the circumstances under which your employee received the charge. The rules are different depending on whether the employee used their own car or a company car as well as the purpose of the travel itself – was it for business or not? To count as business travel, the journey had to be made as a part of their job (for instance, travelling to a meeting or to meet a client) or because they are travelling to a temporary workplace. As far as HMRC are concerned, all other travel is classed as private travel.
Are there any exemptions?
If the employee was driving in a company vehicle, the congestion charge doesn’t need to be reported to HMRC and there would be no additional tax or National Insurance to pay.
However, if the employee was driving in a company vehicle for private purposes and this formed part of a salary sacrifice agreement, you would have to report this to HMRC.
How do you report and pay congestion charges as a chargeable benefit?
If the congestion charge isn’t covered by any of the above exemptions, this must be reported to HMRC and you might have to deduct and pay additional tax and National Insurance depending on the circumstances.
The value to be used is the amount you pay in congestion charges. Where they are covered by an exemption, you don’t need to report them nor do you need to include them in your end-of-year reports to HMRC.
You report the congestion charges in the following ways:
- If the employee was using their own vehicle for business travel, report the cost on your P11D form but you won’t need to pay additional tax or National Insurance.
- If you pay the congestion charges directly for your employee’s private travel, you need to report this on your P11D and deduct and pay Class 1 National Insurance through your payroll. No additional tax will be payable though.
- If you reimburse your employee’s costs for their private travel, this will count as additional earnings so you need to add the value of this to your employee’s other earnings and then deduct PAYE tax and National Insurance through payroll.
- If this forms part of a salary sacrifice agreement and the amount of salary given up is greater than the cost of the congestion charges then the salary amount need to be reported instead. This only applies to salary sacrifice arrangements made after 6th April 2017.
Late payment surcharges are treated in exactly the same way for tax purposes as the initial charge. However, if the charge is not paid by the relevant deadline and a penalty charge is issued, how this is treated depends on who was liable to pay the penalty. If the penalty was incurred by a vehicle registered to the employer and is paid by the employer, there are no further tax consequences for the employee. But, if the vehicle was registered in the employee’s name but the employer directly pays the fine, then according to HMRC, the employer has settled a personal debt of the employee and there would be a tax implication for the employee as it would be classed as earnings and should be treated as such for tax purposes.
How can DSR Tax Claims help?
We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.