Claiming for Electric Used in Electric Vehicle Charging

Silver electric car plugged in and charging

Did you know that you can now claim for the electricity you use to charge your company car at home with no benefit in kind?

HMRC have updated their Employment Income Manual to reflect a change in policy regarding the home charging of electric vehicles and the taxable benefits associated. This impacts employers who reimburse employees for the cost of electricity used to charge company cars and vans at home. A Benefit in Kind (BIK) no longer arises on reimbursement, which encourages the adoption of electric vehicles and can bring down the cost of charging at home for employees.

Previously, a BIK tax exemption existed to cover company car expenses like repairs, insurance, and road tax but not electricity costs when charging at home. However, HMRC has now revised this policy, meaning that they now accept that reimbursing part of a domestic energy bill, which reflects usage in charging a company car or van at home, falls within this exemption.

To qualify for the exemption, you must demonstrate:

  • That the electricity was used to charge the company car or van.
  • That reimbursements for this energy relate solely to the charging of the employee’s company car or van and not to other electricity usage.

There is a practical consideration, which is how to track the electricity which is used for the company car and how to show this is not for the other electricity used in the home, but there are ways to do this.

There are devices and apps on the market which can track energy usage, so as long as there is something to prove that the electricity was only used for the car, this is the documentation that would be needed for the expense claim.

When an employee charges an electric car at work, there is also no benefit in kind, even if the car is owned by the employee rather than the company.

However, if an employee-owned car is charged away from the workplace, the employee is entitled to claim mileage instead. The rate to claim is 45p per mile for the first 10,000 miles, which is the same rate as for petrol and diesel cars, as long as the car is owned by the employee.

For company cars, there is an approved mileage rate, which is updated regularly in line with electric prices. This rate is currently 9p per mile and can be claimed by employees using company cars for their business miles if there is no reimbursement for home electricity.

HMRC have published some flowcharts to help with determining the tax treatment for when electric vehicles are charged in different circumstances.

The flowcharts can be seen on this link – https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23900

We hope this was helpful! If you have any questions or queries, please contact us at info@future-cloud.co.uk.