Is There VAT on Parking [When Does it Apply?]
VAT on PARKING Off-Street Parking Charges
Defined: Off street parking refers to parking facilities like garages with multiple floors and airport parking areas.
Tax Treatment for VAT: The services are generally taxed at a rate of 20 percent no matter if they’re managed by a private firm or an local authority. It was announced by the Court of Appeal in the case of Isle of Wight Council and Others (2014) UKUT 446 (TCC) .
Examples:
- Airport parking
- Parking at the train station
- Private car parks
The VAT claim: Businesses can reclaim VAT on these costs provided they have an official VAT receipt.
NHS Hospital Parking Charges
Recent Legal Updates: In a significant decision that was handed down by the Court of Appeal determined that VAT shouldn’t apply to parking costs in NHS hospitals. The decision was a reversal of earlier rulings, and applies to car parks managed by NHS and could allow NHS trusts to recover approximately PS70 millions in VAT .
Key Points:
- VAT on Parking Application: Not applicable to the NHS-managed car parks.
- Tax Reclaim: NHS trusts can recover VAT from parking charges.
- Scope Only applicable to parking spaces managed by the NHS not those operated by private firms.
On-Street Parking Charges
Defined: On-street parking refers to public highways that have parking usually operated by the local authority.
TVA Treatment Parking charges on streets are typically exempt from VAT as local authorities act in the capacity of highway authorities, not as businesses .
Examples:
- Parking meters
- Zones of parking that are controlled
- Residents’ parking permitsGOV.UK+5Latest news & breaking headlines+5GOV.UK+5
Tax Reclaim: This isn’t applicable since the fees are exempt.
Parking Fines and Penalties
Legal classification: The fines associated with parking as well as penalty fees are typically not in the VAT scope. They are considered to be punitive actions for a violation of parking rules and conditions, not payment for services supplied .
Key Points:
- VAT Applicability: Not applicable.
- Tax Reclaim: Not possible, since fines fall outside the VAT scope.
- Example: Fines for overstaying the parking time, not having tickets, or parking in areas that are restricted.
Summary Table
| Parking Type | VAT Applicability | Reclaimable VAT | Notes |
|---|---|---|---|
| Off-Street Parking | Yes (20%) | Yes | You must have a valid VAT receipt. |
| NHS Hospital Parking | No | Yes | This only applies to NHS-managed vehicle parks managed by NHS. |
| On-Street Parking | No | No | Local authorities manage the local authority They are governed by local authorities; the Charges are not subject to VAT. |
| Parking Fines/Penalties | No | No | It is viewed as punitive and beyond the VAT scope. |
Tips for Businesses
- Keep records: Maintain detailed records of all parking costs including VAT receipts for the purpose of ensuring the accurate reporting of VAT and to claim.
- Know the rules: Familiarize yourself with the VAT treatment for different parking fees to ensure compliance and maximize VAT recovery.
- Consult with professionals: Seek advice from accountants or tax experts to understand complex VAT scenarios and ensure the proper handling of parking-related costs.
