Is There VAT on Parking?

 Some parking is subject to VAT, others are VAT exempt. Learn how VAT applies to car parks, on-street parking, penalties, and transport hubs in the UK.

If you’ve ever reviewed a parking receipt or submitted an expense claim, you might have noticed VAT included – or not. In the UK, the VAT treatment of parking is not always straightforward. Whether VAT is charged depends on who operates the parking facility, the type of parking provided, and whether it’s considered a taxable supply.

This guide explains when VAT applies to parking charges, how on-street and off-street parking are treated differently, and how VAT applies to penalty charges and parking at airports or train stations.

What Is VAT in the Context of Parking?

VAT, or Value Added Tax, is applied to most goods and services in the UK at a standard rate of 20%. However, not all parking charges are subject to VAT. The key issue is whether the organisation charging for parking is acting in a business capacity, and if the parking is considered a taxable supply.

HMRC differentiates between local authority-controlled parking (usually VAT exempt) and commercial parking operations (VAT liable). That distinction affects both how much you pay and whether a business can reclaim VAT.

VAT on On-Street Parking

On-street parking operated by local authorities (e.g. councils) is generally VAT exempt. This includes pay-and-display bays or parking meters on public roads maintained by the council.

Because it’s classed as a statutory function, the council does not charge VAT, and your receipt (if issued) will not include VAT or show a breakdown. VAT cannot be reclaimed on these charges.

VAT on Off-Street Parking

Off-street parking includes car parks and private land, and VAT rules vary depending on ownership.

  • If operated by a local authority, charges may still be VAT exempt.

  • If operated by a private company, the charge is normally subject to VAT at the standard 20% rate. This includes NCP, APCOA, Euro Car Parks and similar providers.

  • In this case, a VAT receipt should be available on request, and VAT can be reclaimed if the parking is a valid business expense.

Always check if the parking operator is VAT registered when reclaiming VAT on business-related parking.

VAT on Parking in a Country Park

If a local authority runs a country park, and parking is simply part of managing access to the site (rather than a commercial activity), it may be VAT exempt.

If the site is commercialised (for example, with on-site shops, cafés, and paid activities), HMRC may treat parking as a taxable supply, and VAT could apply.

There’s no fixed rule – it depends on whether the parking is considered ancillary to a wider taxable activity or a statutory provision.

Are Penalty Charges Subject to VAT?

No. Penalty Charge Notices (PCNs) and excess charges issued for overstaying or breaching parking rules are not subject to VAT. These are considered fines or penalties, not charges for goods or services, and fall outside the scope of VAT.

Whether issued by a council or a private company, VAT cannot be reclaimed on these types of payments.

Examples of Parking with and without VAT

  1. Council-operated street bay in London – VAT exempt

  2. Private NCP car park – VAT charged at 20%

  3. Train station car park operated by a private firm – VAT applies

  4. Council country park pay-and-display – likely VAT exempt

  5. Penalty for not displaying a valid ticket – no VAT

Always check your receipt. VAT invoices or receipts should include the VAT number and clearly show the net, VAT, and gross amounts.

VAT on Airport Parking

Airport parking is almost always operated commercially, either directly by the airport authority or outsourced to a private company. In either case, it is subject to 20% VAT.

If you are a business traveller parking at the airport for work, and you receive a VAT receipt, your business may be able to reclaim the VAT.

VAT on Train Station Parking

Train station parking may be provided by a rail franchise or a third-party company. Most train station parking is treated as a taxable supply and VAT is charged at 20%.

Again, if it’s a business expense, and you obtain a VAT receipt, the tax can be reclaimed as input VAT by VAT-registered businesses.

Summary

Whether VAT applies to parking in the UK depends largely on who is providing the parking and what type of service it is. Local authority on-street parking is usually VAT exempt, while privately operated car parks and transport hubs often charge VAT at 20%.

If you’re a business or self-employed and parking is a legitimate expense, keep receipts and ensure you check whether VAT has been charged so you can reclaim it correctly. For the public, understanding VAT on parking may not change the price you pay – but it explains why some parking is more expensive than others.