Budget predicted to tax staff car parking spaces

Current tax breaks on employee car parking spaces could be removed in this year’s Budget on 21 March.

Car parking is currently a tax-free benefit, but tax experts have predicted that it could soon be taxed as a benefit in kind.

By taxing employees who park at work the government could actively discourage staff to use cars as their principal mode of transport and reduce the amount of harmful gasses released into the environment each day.

Patrick King, tax principal at MacIntyre Hudson, said: "The big green issue now is getting people out of their cars, and this way the government could say hand on their hearts that this is a green tax."

He anticipated that the budget will also include other incentives to encourage fleet managers and company car drivers to opt for green cars, such as the introduction of Value Added Tax (VAT) bands may be introduced to make fuel-efficient cars such as hybrid and Liquefied Petroleum Gas (LPG) vehicles more attractive to organisations.

"[The Chancellor] may introduce say a 5% VAT charge for a green vehicle and then whack a 25% VAT charge for the less fuel-efficient cars," said King.