Small Business In UK Up In Arms Over Car Parking Tax

by Robert Lee, Tax-News.com, London

06 August 2009

Small business representatives have expressed outrage at the introduction of a new tax on employee car parking spaces in the city of Nottingham, a scheme which could be rolled out across more British cities if successful.

The so-called Workplace Parking Levy (WPL) was officially launched on July 31 by Transport Minister Sadiq Khan, and will eventually see firms with 11 or more parking spaces being charged up to GBP350 for every parking space they provide for their staff.

The scheme is not set to be introduced until 2012, but it is expected to net Nottingham city council GBP11.3m per year and, according to the Forum of Private Business will set “a dangerous precedent” that will encourage other local authorities to introduce the tax.

Nottingham is to date the only city with concrete plans to introduce the tax and has been consulting with the central government since earlier this year. However, other major British cities have been identified as candidates for the WPL, which aims to encourage people to switch to public transport. These include Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle and Sheffield. If rolled out nationally across all councils in England, the levy could bring in an additional GBP3.4bn in revenues for local government, the British Chambers of Commerce has estimated.

Forum for Private Business (FPB) Chief Executive Phil Orford said: "While we try not to use such terms lightly, we believe that the introduction of the WPL scheme is scandalous and little more than a stealth tax.”

He added: "It's the business equivalent to introducing a driveway tax to charge people for parking outside their own homes. This announcement could not come at a worse time for smaller businesses, who are struggling with rising costs on almost every front and trying their best to make it through the recession."

The scheme is set to come into force in April 2012 – two years later than originally planned – and companies in the city will initially have to pay GBP253 per year per space on their premises. This is set to rise to GBP350 over two years. Even businesses with less than 10 spaces will get roped into the system as they will have to apply for a licence entitling them to a 100% discount from the tax.

The FPB fears that smaller firms would be disproportionately burdened by the tax.

"I would urge the government, in the strongest possible terms, to shelve this scheme,” Orford said. “If it wants to reduce congestion and pollution, it should concentrate on improving the quality and affordability of public transport, not penalising employers for taking cars off Britain's crowded streets."

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