Whether you’re driving to a client site, attending a meeting in central London or travelling through a toll crossing on business, parking charges, congestion charges and road tolls soon add up.
In many cases, your limited company can pay or reimburse these expenses. However, the deciding factor isn’t the type of charge itself, but whether the underlying journey qualifies as business travel.
Can my limited company pay for parking charges?
Yes, provided the parking relates to an allowable business journey.
For example, if you drive to a temporary workplace, client meeting or other qualifying business location, your company can normally pay for:
- Public car parks
- Client visitor parking
- Hotel parking while travelling on business
- Railway station parking as part of a business journey
- Airport parking for a business trip
The parking charge is related to the reasons for the journey. If the journey qualifies as business travel, the associated parking costs will usually qualify too.
For more information on when travel is allowable, see our guide to business travel expenses.
What about London’s Congestion Charge, ULEZ and Clean Air Zones?
The same principle applies to road user charges.
If you incur the London Congestion Charge, a Clean Air Zone charge or a similar road charging scheme while making an allowable business journey, your limited company can normally meet the cost.
Likewise, if you drive through a toll road or bridge as part of a business journey, the charge is generally an allowable business expense.
Examples include:
- London Congestion Charge
- Ultra Low Emission Zone (ULEZ) charges
- Local Clean Air Zone charges
- Dart Charge
- M6 Toll
- Other business-related toll roads and bridge crossings
As with parking charges, if the journey itself is not allowable, neither are any related costs.
What if I claim mileage?
Many contractors use HMRC’s Approved Mileage Allowance Payments rather than claiming the running costs of their vehicle.
Many contractors assume the approved mileage rate covers every cost of using their car. It doesn’t.
The approved mileage rates are intended to cover the general costs of running your car, including fuel, servicing, insurance, repairs and depreciation.
Parking charges, congestion charges and tolls are treated separately.
This means you can normally claim mileage for the journey itself and also reclaim any qualifying parking charges, tolls or congestion charges incurred during that journey.
When can’t I claim parking or congestion charges?
There are several situations where these costs will not normally qualify for tax relief.
For example, you cannot usually claim parking or congestion charges relating to:
- Travel between home and a permanent workplace
- Ordinary commuting
- Private journeys
- Personal shopping or errands
- Any other journey which is not an allowable business expense
The most common mistake is assuming that paying to park automatically makes the expense allowable. It doesn’t.
Again, the reason for the journey is the key to any claim. If the journey doesn’t qualify, neither will the parking charges associated with it.
What about parking fines and penalty charges?
Parking fees and parking fines are treated very differently.
While legitimate parking charges incurred during business travel are normally allowable, penalties are not.
Your company cannot claim tax relief for:
- Parking fines
- Penalty Charge Notices (PCNs)
- Congestion Charge penalties
- Late payment penalties
- Wheel-clamping release fees
These payments arise because a legal obligation has been breached rather than because of the business journey itself.
How do the temporary workplace rules affect parking claims?
For most contractors, the temporary workplace rules are the deciding factor.
If you are travelling to a temporary workplace, the associated parking charges, congestion charges and tolls will usually qualify as business expenses.
However, once a workplace becomes permanent for tax purposes, travel to that location normally becomes ordinary commuting. At that point, the related parking and road charges will generally cease to be allowable.
The 24-month rule often determines when this happens. You can read more in our guide to the 24-month rule.
What records should I keep?
As with any business expense, it’s important to retain evidence of your claims.
Keep receipts or digital confirmations for parking charges, congestion charges and toll payments. If you use services such as RingGo, NCP or Dart Charge, download or retain the payment confirmations alongside your accounting records.
It’s also good practice to keep a record of:
- The date of the journey
- The destination
- The business purpose of the trip
- The amount paid
If HMRC ever asks how a claim was calculated, having complete records will make the process much simpler.
For a broader overview of what your company can and can’t pay for, see our guide to limited company expenses.