SolvedEIM23900 | Car benefit: special cases: issues relating to electric cars
From HM Revenue & Customs · Employment Income Manual
| Provision | Company car made available for private use | Employee’s car used for business |
|---|---|---|
| Employer allows cars to be charged from a vehicle charging point at work | No taxable benefit - electricity does not sit within the meaning of fuel so the Fuel Benefit Charge does not apply. And there is no further benefit charge as section 239(4) ITEPA 2003 specifically excludes a benefit connected with a taxable car | Before 6 April 2018, Taxable benefit based on cost to the employer. From 6 April 2018, see EIM01035 |
| Employer pays for a vehicle charging point to be installed at the employee’s home | No taxable benefit because of section 239(4) ITEPA 2003 | Taxable benefit based on cost to the employer |
| Employer pays for solar panels and/or a home battery to be installed at the employee's home | Taxable benefit based on the cost to the employer. Section 239(4) ITEPA 2003 applies only to benefits which are necessary for the provision or running of the taxable car. Here the connection with the taxable car is too remote for the exemption to apply | Taxable benefit based on the cost to the employer |
| Employer pays for charge card to allow individuals access to public charging points | No taxable benefit because of section 239(4) ITEPA 2003 | Taxable benefit based on cost to the employer |
| Manufacturer leases battery separately to the car | Cost of battery forms part of the list price - car will not go without it so it must be integral (like wheels) | Not applicable |
| List price includes cost of battery | Use list price | Not applicable |
| List price does not include cost of battery | Use notional list price | Not applicable |
| Employer pays to lease a battery for a privately owned car | Not applicable | Taxable benefit based on cost to employer |
| Mileage allowances | See Advisory Electricity Rate (AER) guidance | Authorised Mileage Allowance Payments (AMAPs) for business travel, and, if the employer doesn't use AMAPs or pays less than the published rates, employee may claim appropriate amount of tax relief under Mileage Allowance Relief (MAR) |
If an employer decides that an employee should repay the cost of electricity for their private mileage, they may wish to use the Advisory Electric Rates (AER’s), see above.
A link to check if you need to pay tax for charging an employee’s electric car can be found here.
Tax treatment when electric cars are charged
Employee charges car at work
| Stage | Action | Outcome |
|---|---|---|
| Stage 1 | Who owns the car? | If company car, no additional benefit. If employee’s car, go to stage 2 |
| Stage 2 | When was the car charged? | If before 6 April 2018, go to stage 3. If after 5 April 2018, go to EIM01035 |
| Stage 3 | What is the car used for? | If private use only, the cost of electricity used is taxable as a benefit-in-kind. If business use only or mixed use, the total cost of electricity used is taxable as a benefit-in-kind. There is no matching deduction. If AMAPs are not received, MAR is available, see EIM31330 |
Employee charges car at home or at a public charging point: their employer reimburses the electricity costs
| Stage | Action | Outcome |
|---|---|---|
| Stage 1 | Who owns the car? | If company car, go to stage 2. If employee’s car, go to stage 3 |
| Stage 2 | What is the car used for? | Business and private mileage. The exemption under s.239(2) ITEPA 2003 means there is no separate charge to tax under the benefits code when an employer reimburses an employee for the cost of electricity to charge their company car at home or at a public charging point. For the National Insurance Contributions position, see NIM06440. Employers will need to ensure that the reimbursement made towards the cost of the electricity is solely for the company car |
| Stage 3 | What is the car used for? | If private use only, reimbursement is taxed as earnings. If business use only or mixed use, go to stage 3a |
| Stage 3a | How is reimbursement calculated? | If by reference to mileage, AMAP rules apply for business miles travelled. Any amounts in excess of AMAP rates would be taxable. If less than AMAPs rates, employee may claim appropriate amount of tax relief under MAR for business miles. If a flat-rate amount is paid it is taxed as earnings |
Employee charges car at home or at a public charging point: their employer does not reimburse the electricity costs
| Stage | Action | Outcome |
|---|---|---|
| Stage 1 | Who owns the car? | If company car, go to stage 2. If employee’s car, go to stage 3 |
| Stage 2 | What is the car used for? | If private use only, no tax implications. If business use only or mixed use, employee is entitled to section 337/338 ITEPA 2003 deduction for electricity cost of business miles travelled |
| Stage 3 | What is the car used for? | If private use only, no tax implications. If business use only or mixed use, if AMAPs are not received, MAR is available |