Congestion charge & ULEZ

Conditions

• Congestion charges, ULEZ charges and similar local authority clean air zone charges incurred on a genuine business journey are allowable travel costs. HMRC's employee travel guidance lists 'Congestion charges and tolls' as claimable costs (GOV.UK, updated October 2024), and BIM37600 similarly treats road tolls as allowable for trade journeys.
• The charge must relate to a qualifying business journey. Driving through a charging zone on the way to your regular permanent workplace is commuting and is not allowable.
• For a limited company or employer, the tax treatment depends on whose vehicle incurred the charge. Where the charge is on a company-owned vehicle and the employer pays it, there is no benefit-in-kind consequence for the employee or director — the cost is simply a business expense of the company. Where the charge arose on an employee's or director's private vehicle and the company pays it directly (rather than reimbursing a claim), the pecuniary liability principle applies and a tax charge may arise under section 62 ITEPA 2003. The cleaner arrangement is for the individual to pay the charge and claim reimbursement as a business expense. (Source: HMRC Employment Income Manual EIM21680.)
• Employees who pay congestion or ULEZ charges on qualifying business journeys and are not reimbursed by their employer can claim tax relief on the unreimbursed amount.
• Unpaid charges that result in penalty notices are never allowable — penalties for non-payment cannot be deducted for tax purposes, just as parking and traffic fines cannot.

Common mistakes

• Claiming a congestion or ULEZ charge incurred while commuting to a permanent workplace.
• A limited company paying congestion charges on a director's personal car without considering that this may be treated as earnings under the pecuniary liability principle.
• Attempting to claim a penalty notice for a late or unpaid charge — penalties are always disallowed.

What to keep

• TfL or local authority charge records showing dates and amounts (TfL provides account statements for registered vehicles).
• A note of the business purpose of the journey on each date the charge was incurred.

Real-world example

A self-employed architect drives into central London for a client presentation and incurs the congestion charge and a ULEZ charge. Both are allowable business travel costs. The same architect drives through the zone on the way to a co-working space they use as their regular base — that is commuting and neither charge is allowable.

Frequently asked

Related allowances