Expenses and benefits: congestion charges
Employers' tax and reporting for congestion charges
1. Overview
As an employer covering the costs of congestion charges for your employees, you have certain tax, National Insurance and reporting obligations.
Different rules apply depending on whether the employee used a company vehicle or their own car, and whether they were travelling on business or not.
Business travel
Travelling on business means that the employee either travels as part of their job (eg for meetings) or needs to go to a temporary workplace. Everything else is counted as private travel.
2. What's exempt
You don't have to report or pay anything to HMRC if the employee is either:
- driving in a company vehicle
- using their own vehicle for business travel and earning at a rate of less than £8,500 a year
3. What to report and pay
If congestion charges aren’t exempt, you must report them to HMRC, and may have to deduct and pay tax and National Insurance on them.
The value of the benefit to use is the amount you pay in congestion charges.
You can apply for a dispensation, which means you won't have to include congestion charges on your end-of-year reports.
If the employee is using their own vehicle to travel on business
| Who gets the benefit | What to do | What to deduct or pay |
|---|---|---|
| Employees earning at a rate of £8,500 or more a year | Report on form P11D | Nothing |
| Directors | Report on form P11D | Nothing |
If you pay congestion charges directly for an employee’s private travel
| Who gets the benefit | What to do | What to deduct or pay |
|---|---|---|
| Employees earning at a rate of less than £8,500 a year | Report on form P9D | Deduct and pay Class 1 National Insurance (but not PAYE tax) through payroll |
| Employees earning at a rate of £8,500 or more a year | Report on form P11D | Deduct and pay Class 1 National Insurance (but not PAYE tax) through payroll |
| Directors | Report on form P11D | Deduct and pay Class 1 National Insurance (but not PAYE tax) through payroll |
If you reimburse congestion charges for an employee’s private travel
This counts as earnings, so you’ll need to:
- add the value of the benefit to your employee’s other earnings
- deduct and pay Class 1 National Insurance and PAYE tax through payroll.
4. Technical guidance
The following guide contains more detailed information: