Taxation On Electric Vehicle Charging Reimbursements
No matter your opinion on electric cars, there is no denying that are proving a more and more popular choice by road users. Furthermore, the attractive tax benefits mean that the electric car is fast becoming the company car of choice for businesses.
However, there is now a debate among advisors about the accuracy of HMRC guidance regarding businesses reimbursing employees for charging their vehicles at home, which is causing confusion.
The old HMRC rules
Until now, HMRC guidance has suggested that when an employer pays an employee for charging their car at home, it would be seen as a taxable benefit.
It is commonly understood that electricity is not categorised as fuel. Based on the old tax rules, because the cost of domestic electricity incurred by charging the company car is indistinguishable from “normal” domestic electricity usage, reimbursement of electricity costs to charge the car would give rise to a taxable benefit.
The new HMRC rules
After a campaign by the ICAEW, HMRC have recognised that if you can prove that the electricity usage reimbursement is solely for the charging of an electric car, you can now be paid this reimbursement without there being any taxable benefit. To help with this calculation, there are apps available that can calculate this for you.
Can I reclaim these expenses retrospectively?
If you have previously followed the rules and have not been reimbursed for home electric car charges, you may be able to recoup these expenses from your employer. Such reimbursements can be very lucrative. For example, if you had a Tesla Model Y and you had spent around £25 a week on charging at home, you could reclaim almost £4,000 in costs!
Taxable benefit calculation on company vehicle private ‘fuel’ reimbursement
The guidance seems to suggest that where a company vehicle is provided and there is no business use (100% private), reimbursements would give rise to a taxable benefit based on the reimbursements given. This is of course a very different approach by HMRC to their stance on company car fuel benefits, where the benefit is based on the list price of the car and the CO2 emissions.
Please note that the HMRC guidance is complex and the article above does not cover all of the rules and stipulations on this subject. If you are in any doubt, please do not hesitate to contact us.
