Parking fines can be a frustrating and unexpected expense for many motorists, leading to questions such as “are parking fines tax deductible?“. They are usually issued as penalties for various parking contraventions, ranging from overstaying in parking bays to improper use of disabled spaces. As a taxpayer, it is natural to wonder whether parking fines can be treated as a tax-deductible expense. In this article, we will explore the rules and regulations surrounding parking fines.
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Tax Deductibility
First we need to understand tax deductibility and how it works. Tax deductibility refers to the practice of subtracting certain allowable expenses from your total taxable income. This reduces the overall amount of tax you are liable to pay, ultimately lowering your tax bill. However, not all expenses are tax deductible, and there are specific guidelines set by Her Majesty’s Revenue and Customs (HMRC) to determine what can and cannot be claimed as a tax deduction.
Parking Fines and Tax Deductibility
Parking fines, including Parking Charge Notices (PCNs) issued by local authorities, the police and Transport for London, and Parking Charge Notices issued by Private Parking Companies (PPCs), are generally not tax-deductible. HMRC does not consider parking fines as allowable business expenses or expenses related to your employment.
The rationale behind this decision is that parking fines are considered to be a penalty or a consequence of breaking the law, rather than a necessary expense for carrying out business or employment duties. So are parking fines tax deductible? Unfortunately, they do not meet the criteria for tax deductibility.
It is essential to note that the lack of tax deductibility applies to both individuals and businesses. Even if a company car receives a parking fine during the course of business operations, the fine itself cannot be claimed as a tax deduction by the employer or the employee.
Exceptions To The Rule
There are a few specific situation outlined in BIM42515 – Specific deductions: administration: fines in which parking fines might be treated differently for tax purposes. These could be:
- If a parking fine is handed to an employee, or attached to the vehicle they own, it becomes their liability. In this situation, if the employer pays for the parking fine on behalf of the employee, the employer will be eligible for a tax deduction.
- If a parking fine is issued because a vehicle has exceeded the paid for time limit in a private car park, this can be seen as an excess charge payable under the terms of the contract made with the car park provider. This would be tax deductible if the parking fine is incurred “wholly and exclusively for the purposes of the trade“.
BIM37007 – Wholly and exclusively: overview offers guidance on how to justify what is classed as “for the purpose of trade“.
Can I Claim Back Parking Charges For Work?
However, it is possible to claim back parking charges for work. As long as the parking cost is related to a business journey, you will be allowed to claim it as an expense. This also includes:
- Congestion charges and tolls for business related journeys.
- Hotel stays and meal costs that are incurred for overnight business trips.
- Public transport costs for business related journeys.
- Business phone calls and printing costs.
You cannot however claim for travelling to and from a work location that is classed as your base “home” location. Unless you are travelling to a different or temporary place of work. This information can be found on the Governments tax relief webpage.
TLDR: Are Parking Fines Tax Deductible?
- Her Majesty’s Revenue and Customs (HMRC) does not consider parking fines as allowable business expenses or expenses related to your employment;
- If the employee is liable for the parking fine, and their employer pays for it, the employer will be eligible for a tax deduction;
- If the parking fine is incurred “wholly and exclusively for the purposes of the trade“, this could be tax deductible;
- Parking charges related to a business journey can be claimed as an expense.
Sources used to write this article: