A common query we receive from our clients is how tax relief works against electric car charging costs. Many business owners charge their electric car at both their home as well as their business premises – they often wonder if the rules differ here and whether any taxable benefit arises.
This article sets out the tax rules when it comes to tax deducting electric vehicle charging and the key points you need to be aware of. The content is based on our interpretation of the HMRC Manual EIM23900. The article has been reviewed by a Chartered Accountant and was accurate for September 2024.
If the COMPANY owns the vehicle:
Electric Vehicle Charging at the place of Work:
No taxable benefit arises here; HMRC do not consider electricity to be within the scope of the “fuel benefit charge”.
This means the employer (i.e. your Limited Company) can pay the cost of an employee’s private mileage for an electric car and there will be no taxable benefit or P11D requirement.
We want to make clear here that although there is no taxable benefit on electric charging, there is of course a taxable benefit charge on provision of an electric car for private use – currently 2% of the value, and planned to move to 3% in April 2025.
Electric Vehicle Charging at Home:
The legislation under s.239(2) ITEPA 2003 means there is no tax charge under the taxable benefits code where an employer reimburses an employee for the electricity cost of charging a company car at home.
Employers should ensure that any reimbursement provided to the employee is solely for use of the company car, and not for any of their other privately owned vehicles or equipment.
Crucially, the car must not be used only for private use. There must be an element of business use (defined as “mixed” use) to ensure the electric charging attracts no taxable benefit or P11D charge.
Installation of a charging point at employees home:
Where the company owns the vehicle there is not taxable benefit if the company pays for a charging point to be installed at the employees home.
If the EMPLOYEE owns the vehicle:
Electric Vehicle Charging at the place of Work:
HMRC manual EIM01035 states that from April 2018, where a person is provided with workplace charging facilities no taxable benefit will arise.
The employer must directly bare the cost of the charging; they cannot reimburse or make a payment to an employee for the charging. To ensure no taxable benefit arises, other conditions must be met including…
- The charging facilities must be provided “at or near” the workplace. They cannot be at the employees home.
- Charging must be available to all employees, not just selected individuals.
- It cannot form part of an optional remuneration arrangement.
Electric Vehicle Charging at Home:
The rules are most restricted where the car is owned by the employee and is being charged at their home.
Charging of the vehicle for private use reimbursement is denied.
For business trips, the standard Approved Mileage Allowance Payment (AMAP) Rates apply. These currently stand at 45p a mile for the first 10,000 business miles travelled. If the employer chooses to reimburse the employee an amount in excess of the AMAP rate (45p currently) then a taxable benefit charge will apply.
