PEOPLE driving to work could face even higher bills than first thought under the new Scottish parking tax because of VAT, it has emerged.

The Workplace Parking Levy (WPL) could be closer to £500 than the £400 a year expected.

Finance Secretary Derek Mackay last month agreed to let councils set a WPL as part of a deal with the Scottish Greens on the 2019/20 budget.

The only council in the UK to set a WPL is Nottingham, where employers are charged £415 for each workplace parking bay to help cut congestion.

Last week, Mr Mackay admitted he had not carried out any economic analysis before agreeing to the policy.

Adam McVey, the SNP leader of Edinburgh City Council, who is keen to introduce a WPL, also said the cost should be passed on to workers in order to change their behaviour.

However it has now emerged that in Nottingham workers pay extra under such an arrangement.

The council’s website states: “VAT is not payable by employers… on the WPL charge. Any parking charges an employer introduces for its employees are, however, subject to VAT.”

Adding VAT to Nottingham’s £415 charge takes it to £498 a year.

The Scottish Tories said it more evidence of a WPL “shambles”.

MSP Murdo Fraser said: “The SNP’s Car Park Tax is simply another punitive tax on hardworking Scottish taxpayers. Cobbled together to keep the Greens happy, without any consultation, this tax has been unravelling from the beginning.

“Every day we are finding another negative aspect to this tax – now we know that if it is handed to employees, it will be subject to VAT and another 20 percent increase.

“This tax on employment is yet more evidence of the SNP’s anti-business agenda. The SNP must see sense and abandon this disastrous tax.”

The Green plan for the WPL would allow councils to design their own schemes and set fees, subject to consultation and ministerial sign-off.

SNP ministers say NHS workers and hospitals will be exempt, but have suggested there could also be exemptions for other public sector staff, like teachers and the police.

The then Labour-LibDem Scottish Executive tried to bring in a WPL in 2000, but gave up in the face of opposition from business and other parties.

Writing in Scotland on Sunday, Mr Mackay said: “Once these powers are in place it will be for local government to determine if they should be used.

“The necessary legislation will require parliament’s careful consideration and approval. No local authority will therefore be able to levy them this year.”

He added: “Due to the dereliction of duty by other parties and their failure to negotiate, I was faced with a choice between allowing the budget to fall or making concessions with the Greens in order to secure agreement.

“Failure to pass the budget at Stage One would have jeopardised the Scottish Government’s ability to raise the necessary revenues to fund our essential public services.

“That would be reckless in the extreme and would have harmed our hospitals, schools, public sector workers and our economic stability. I was not prepared to allow that to happen.”

On social media, Labour MSP James Kelly called the WPL an”absolute outrage”, adding: “Let’s not tax people for bringing their car to work.”

A Scottish Government spokesperson said: “Any charge would be at the discretion of local authorities, based on local circumstances, so any predicted costs to businesses or individual workers are speculation at this point.”