Electric car charging rules

With the government’s ban on the sale of new petrol and diesel cars coming into effect in the not-too-distant future, along with its incentives for low-emission vehicles, it’s no surprise that the electric vehicle market is booming, with sales increasing by 40% last year.

But what are the tax implications of charging your electric (or hybrid) vehicle? Well, that depends on whether it’s a personal or company vehicle and whether you charge it off site (for example at your home or at a service station) or at your place of work. Let’s take a look at some common scenarios and their tax implications:

Company car

Charging your vehicle at the workplace: the tax rules are pretty simple – regardless of whether you’re charging your company car for personal or business use, no taxable benefit will apply. This is because electricity isn’t considered ‘fuel’ and therefore doesn’t trigger the fuel benefit charge.

Charging your vehicle off site: this is where it can get a bit more complicated, and the tax implications will depend on who is paying for the electricity:

• If your employer covers the cost of electricity for charging your vehicle off site, no tax charge will apply.
• If you pay your charging bill which is then reimbursed by your employer, the tax implications vary yet again. If your company car is used solely for business purposes, you won’t be taxed for the reimbursement; however, if you use your vehicle solely for personal purposes or for a mixture of personal and business use, you’ll be taxed on the reimbursement (but you may be able to claim business mileage deduction for any business use).
• If you pay for your own charge point electricity and your employer isn’t going to reimburse you, you won’t have to pay tax if the vehicle is used solely for personal purposes. If you use your company vehicle for either business use or a mixture of business and private use, you can potentially claim a business mileage deduction.

Car owned by the employee

Charging your vehicle at the workplace: just like with a company car, if your workplace is equipped with charging points and your employer permits you to use them, no taxable benefit will apply to charging privately owned vehicles at your place of work, regardless of whether you’re charging for personal or business use, due to a tax exemption. However, certain conditions must be met in order to qualify for this exemption. Please visit the government’s Employment Income Manual for further information.

Charging your vehicle off site: similar to company-owned cars, the tax implications of charging your privately-owned vehicle off site will vary depending on who is paying for the electricity and what your vehicle is used for:

• If your employer provides the electricity to charge your vehicle off site, you will have to pay tax on the full amount of electricity used.
• If you pay your charging bill but this is then reimbursed by your employer, you’ll be taxed for the reimbursement, but you can potentially claim business mileage deductions if your vehicle is used either solely for business or for a mix of business and personal purposes.
• If you pay for your own charge point electricity and your employer doesn’t reimburse you, you won’t have to pay tax. If you use your vehicle for business or a mixture of business and private use, you can potentially claim a business mileage deduction.

What about those who work from home?

With the sudden increase in home- or hybrid-working looking like it’s here to stay, this is no doubt a question that a lot of employees will be asking. For many, if you’ve had an electric charge point fitted at your home and your work is pretty much permanently based at home, the rules for workplace charging will usually apply. But extra caution should be given here as certain situations can affect eligibility for tax deductions.

Further information

We’ve mentioned above that in some instances you may be able to claim a business mileage deduction; however, there are various circumstances that can affect whether or not you can claim and how much you can claim. HMRC has a really handy online tool that you can use to check whether you’ll need to pay tax for charging an electric vehicle, or if you’d like further advice about how you can improve your tax efficiency when it comes to owning an electric or hybrid vehicle, please don’t hesitate to get in touch with our experienced accountancy team. We’ll discuss the relevant options for you in more detail to ensure that you’re getting the very most out of your money. Free consultations are also available – see our website for details.