ACCA Advanced Taxation (ATX) Practice Exam

Is the provision of a car parking space near an employee's workplace considered an exempt benefit for income tax and NIC?

1. Yes, always

2. No, not under any circumstances

3. Yes, unless specified otherwise by the employer

4. Only if provided on company premises

The correct answer is: Yes, always

The provision of a car parking space near an employee's workplace is classified as an exempt benefit for income tax and National Insurance contributions (NIC) under certain conditions. Specifically, the exemption applies when the parking space is provided for the convenience of the employer. This means that if an employer provides a parking space to help employees perform their duties effectively, the benefit is not subject to taxation. In the context of the options available, the correct answer indicates that such a parking benefit is always exempt. This reflects the principle that the benefit is seen as a necessary facility that supports employees in their work without creating a taxable advantage. In practice, it's essential to clarify the circumstances under which this exemption holds. While certain options suggest limitations or specific conditions, the broad interpretation aligns with the notion that providing a car parking space is considered beneficially aligned with the activities of the workplace, thereby qualifying for exemption. This understanding helps delineate the circumstances under which benefits are taxable versus non-taxable, which is crucial for both employers and employees in effectively managing and understanding their tax obligations.