Charging electric cars at home

HMRC have clarified their view of the tax treatment of the reimbursement of electricity costs where employees are charging their electric company cars at home. 

HMRC now accepts that reimbursing part of a domestic energy bill, which is used to charge a company car or van, is exempt from income tax.

Their previous view was that such reimbursements were taxable.

The exemption will only apply provided it can be demonstrated that the electricity was used to charge the company car or van, which may be difficult to determine in practice. Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of their company car or van. At present there is no guidance available to work from, so careful records will need to be kept, that can be produced if any claim is questioned.

Do remember that where the employee uses workplace charging facilities there is no taxable benefit.

HMRC have still not revised their view on reclaiming VAT in respect of business miles driven by an employee who has changed their car at home. Regardless of whether the vehicle is a company car or the employee’s own, the employer cannot reclaim the VAT because the supply of electricity is made to the employee, not the employer.

If you have any questions about the above, please get in touch, and, if any guidance is updated, we’ll let you know!