VAT (Value Added Tax) applies to a vast range of items in the UK and Ireland. If you own a business, you may incur a parking fee at some point. Whether collecting office supplies, delivering goods, or visiting a client, your transport will require a parking space.
While estimating your business expenses, it is also crucial to consider “Is there VAT on parking?” VAT comes off as a complicated phenomenon for many people. Its complexity comes because it treats every product and service individually. Similar items may have different VAT rules in varying situations. That is why, for most people, it becomes difficult to comprehend VAT rates.
Having proper knowledge about VAT significantly helps in a business. If you know about VAT, you can make efficient tax returns and save every penny of your business. Therefore, if you want to know more about “Does parking have VAT,” then the following context may guide you in this regard.
The rules for parking VAT have notably changed over the past two decades. In fact, it is apt to say that regulations for VAT on parking have instead been inconsistent
But don’t you worry! After a thorough study, we have bought clear-cut information regarding how VAT affects your bills or a parking business and whether parking is vatable or not. In order to calculator VAT on Parking, use our handy VAT Calculator to do vat calculation quickly and with accurate result.
On-Street parking zones come under the management of local authorities. According to the UK's and Ireland's legislature, using a public space to park vehicles is not categorized as a business activity.
Therefore, the VAT fee for on-street parking is zero-rated. For on-street cases, VAT on parking is 0%. This rule applies to all the on-street parking sectors in Ireland and the UK.
If you have used on-street space to park your vehicle for business purposes, you cannot reclaim VAT from HMRC on the parking fee. It is because the service is zero-rated, and its fee does not include VAT charges.
Off-street parking is different from the previous one. A private or union-based authority usually manages off-street parking services. These areas are not public and are explicitly allocated to parking. They have their own rules and implications, which may vary from place to place.
However, the VAT on parking for all off-street parking areas remains the same. In the UK and Ireland, off-street parking comes under the standard-rated services. Thus, if you avail of off-street parking services, your fee will include 21% VAT.
The 21% VAT is a standard-rated category and remains the same in both the UK and Ireland. You can verify the VAT rate applied to your fee with the help of the parking receipt. If you parked in an off-street space for professional purposes, you can reclaim it from HMRC using the receipt.
Parking in public country parks is not a new phenomenon. You must have seen a line of different vehicles parked outside the park. However, you cannot categorize parking in country parks the same as off-street parking.
Off-street areas are exclusively reserved for vehicle parking. But parks and public gardens are for leisure purposes, yet people can also park their vehicles outside these places. Thus, the question here is whether VAT applies to the parking fee for country parks or not.
The VAT on parking for country parks depends upon the property owner. If the park is public, there will be no VAT. But if a private company owns it, then they may or may not charge a parking fee.
If parking in a private park is free, its VAT charges will be zero-rated, i.e., 0%. But if the park charges a fee, then standard-rated VAT will apply. When you receive the parking receipt, you can check its charged VAT rates. Registered business owners can show the tickets to HMRC and reclaim their VAT amount.
The above context has dissected the VAT on parking from a driver’s perspective. But now let’s scrutinise this term for businesses. There are many companies that own parking spaces or provide corresponding services. These businesses should be well-familiar with rules for VAT on parking. Because if they are not, they may fail to charge their customers, resulting in sheer financial loss.
Also, Read about What is a VAT 652 Form and How to Correct VAT Errors?
The first category we shall discuss is the owners owning the land and providing parking services. These are private-owned companies that facilitate people with off-street parking services. Such companies must charge standard-rated VAT on parking in the UK and Ireland on the following facilities;
The next category is where a businessman owns the parking land but does not provide parking services. In this case, you will still charge the customer a standard VAT rate of 21% in both the UK and Ireland. The following are the facilities that come under supply of land instead of parking facilities.
There are a few exceptions to the above standard-rated items. These come under the zero-rated category, i.e. they are VAT-exempted. Vat cannot be reclaimed on zero-rated services from HMRC, even if your business is registered for Vat. It is because their VAT percentage is already zero. The zero-rated exemptions include the following;
People often ask, "Is there VAT on parking tickets?" Contrary to what many people think, the VAT on parking fines has different rules. According to the UK’s government, Penalty Charge Notices (PCN) don’t come under the VAT’s scope. Since the parking fine is not a service or a good supply, thus, it does not qualify for VAT in the UK.
However, if the parking charges are not timely paid, leading to a bulk-up, then a 21% VAT will be imposed. But this VAT will only apply if the parking fee comes under the standard category. Similarly, parking tickets are considered a penalty instead of a facility in Ireland.
Therefore, VAT does not apply to parking fines in Ireland. But, there are exceptions in these cases. If your parking facility was private-owned, your parking ticket may include VAT. You can always refer to the ticket's receipt to verify whether VAT was applied to your parking fine.
Also, Read about What is VAT on Energy Bills? - Electricity and Gas Supplies
Final Verdict
VAT on parking may sound like a complex term. But if you learn systematically, you will find this term simpler and easier to comprehend. The rules for parking are almost similar in the UK and Ireland. Since both countries are a part of Great Britain, it is feasible for them to have similar rules and regulations.
FAQs
On-street parking spaces are public-owned. They are not managed by some local authority. Instead, the government supervises them. Therefore, like many public services in the UK and Ireland, on-street parking is also VAT-exempted.
On-street parking in Ireland is VAT-exempted. But when it comes to off-street parking spaces, standard-rated VAT is applied. It means that the off-street parking fee includes 21% VAT. You can reclaim this VAT from HMRC by submitting the VAT-incurred receipts.
Depending upon the severity of the condition, the parking ticket costs between € 40-200. Once you have been presented with a ticket or notified by an officer, you must submit the fine within 28 days. In case you fail to do so, an additional penalty to the fine will be applied.
Rían Doyle
I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.
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