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Business Services  •  Business Tax  •  Personal tax

Charging electric company vehicles at home becomes more tax efficient

By RJP LLP on 26 October 2023

HMRC has amended its guidance on the tax payable for electric charging of company cars and vans at residential properties. Previously, if you had a fully electric company car, charged it at home and then claimed for the cost of the electricity as an expense, the funds reimbursed would have been taxable.

The employee expenses legislation (Section 239 ITEPA 2003) outlines exemptions available on the payments and benefits provided in connection with company cars and vans. This legislative provision exempts aspects such as vehicle repairs, insurance, and road tax.

HMRC previously maintained that the reimbursement of costs in relation to charging a company car or van at a residential property was not caught by this exemption. Now, payment received for the costs of charging is treated as a tax-free benefit.

The statement provided by HMRC says: ‘Following a review of our position, 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.’

This means that no separate charge to tax under the benefits code will arise where an employer reimburses the employee for the cost of electricity to charge their company car or van at home.

Employees will need to provide evidence that the electricity used was purely for charging their electric company car or van in order to be eligible for the exemption.

Employers will need to check the evidence and maintain records to demonstrate that any reimbursement made towards the cost of electricity relates solely to the charging of a company car or van.

If you would like advice on the tax relating to company cars and other employee benefits, please email us via partners@rjp.co.uk.

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