Date posted: 15th Nov 2023
HMRC have recently clarified their view of the tax treatment of the reimbursement of electricity costs where employees charge 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.
Note that the exemption will only apply if 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.
It should be remembered 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 queries, regarding electric cars, please call us.
