Can an employer recover the cost of parking expenses at work from an employee via a salary sacrifice arrangement without giving rise to a benefit in kind?

The exemption for parking provision and expenses under section 237 ITEPA 2003 exempts the provision, reimbursement, and payment of parking at or near the employee’s workplace.

If an employer were to provide, reimburse or pay for parking facilities and then recover this from the employee’s gross earnings under a salary sacrifice arrangement, the exemption no longer applies, and the provision becomes taxable under s203A ITEPA 2003.

Under s69A ITEPA 2003, if an employee receives a benefit in exchange for gross salary, the employee is taxed on either the cost of the benefit or the amount of salary given up as taxable earnings to the employee per s203A(1) ITEPA 2003. The employer is obliged to report the taxable amount on for P11D.