Company Electric Vehicle (EV) Charging At Home

HMRC has amended guidance on the tax treatment of electric charging of company cars and vans at residential properties.

Many business owners will have purchased an electric car or van, owned within a company, over the last few years, attracted by the generous business and personal tax treatments. Where this Electric Vehicle (EV) has been recharged at the business owner’s home, on the normal domestic electric account, reimbursing this cost from the company, without a complicated and unfair tax treatment, has been impossible.

In the past HMRC have taken the view that where an employer reimburses their employee for the cost of charging a company-owned, wholly electric car, that is available for private use, the reimbursement was taxable as earnings. However following updated guidance being released, HMRC now accept that this type of reimbursement can be treated as a tax-free benefit. HMRC now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van, will fall within the exemption provided by section 239 ITEPA 2003. Following this change HMRC has updated the EIM23900 manual to reflect their revised interpretation regarding home charging of electric company cars. This includes company vans that are solely electric.

The exemption will only apply providing it can be demonstrated that the electricity was used to charge the company car or van

The company can now reimburse for both business and private use, as tax free benefits in kind. However, this exemption will only apply providing it can be demonstrated that the electricity was used to charge the company EV. There appears to be a few ways of demonstrating this usage:

• A smart phone charging app.
• Some home charger units can produce usage reports.
• Work from the car mileage records, reimbursing at 10p per mile (business and private)

This is clearly a welcome change and it will simplify the tax administration for many SME business owners and other employees with company EV’s.

For more information of advice, please contact your local Whitings LLP office.

Disclaimer - All information in this post was correct at time of writing.