Electric car charging costs

How the tax rules for electric car charging costs are applied will very much depend on whether the vehicle is recharged at home or the place of work. It will also depend on whether the vehicle is owned by the company or personally. HMRC have discussed the various scenarios in their guidance, and we cover these below.

Electricity costs - charging point at workplace

Where the company permits an electric car to be recharged at the workplace the position is as follows:

If you use a company car then there is no taxable benefit as electricity does not fall within the definition of fuel.
Where this is your own personal car, similarly there will be no taxable benefit.

Electricity costs - charging point at employee's home

Where the electric car charging point is based at your home, the tax treatment is slightly more complex. This depends on whether you or the company own the car concerned plus it will also be contingent on whether the company provides the electricity or you have met these costs personally.

Car charged at home - company provides electricity costs

If this is a company car, and the electricity is provided by your employer, there will be no taxable benefit in kind on the costs of charging the vehicle.
Where this is your privately owned vehicle, then even if there is exclusive business use you will be taxed on the total cost of electricity used. Equally where there is mixed use, the electricity costs will be taxable as a benefit-in-kind. Unfortunately, there is no matching deduction that can be made for business mileage using mileage rates.

Car charged at home - employee pays electricity costs

If this a company car with business use only then you will not be taxed on any reimbursement made by your employer for your electricity costs.
Where this is a company car used both for business and private purposes then any reimbursement of electricity costs made by your employer will be taxed as earnings. It may be possible to claim a deduction for business miles travelled.
When you own the vehicle personally, then any reimbursement made by your employer for private use is taxable. However if the car is used exclusively for business or there is a mixture of business and private use it may be possible to claim a deduction for the cost of electricity relating to business miles travelled.

Car charged at home - no reimbursement of electricity costs

There are no tax implications for a company car with private use only.
Where this is a company car used both for business and private purposes then it may be possible to claim a deduction for business miles travelled.
As in the case of the company car above, there are no tax implications for a personally owned car with no business use.
If your personal car is used both for business and private purposes, then it may be possible to claim a deduction for business mileage.

Conducting your business from home

Arguably where you almost exclusively carry out your business from home and have installed an electric car charging point at your home, the workplace charging rules should apply (see above). However, care should be taken, especially if you own your electric car personally and your company has applied for a government grant towards the cost of installing the electric car charging point at home. This may compromise any tax deduction for any charging costs relating to business use. Therefore, where you have been awarded a government grant for an electric car charging point which has been installed at your home, prima facie this should be covered by the workplace charging rules.

What about vans?

There is no taxable benefit in kind where your company provides you with an electric van, even if it is used privately. Additionally, there is no taxable benefit on electricity costs provided. Maybe now is the time to start investing in a Cybertruck!

VAT treatment of electric vehicle charging points

HMRC recently published guidance about the VAT treatment of electric vehicle charging points. This can be summarised below:

Liability relating to charging.

The supply of electric vehicle charging via a charging point in a public place is subject to VAT at the standard rate of 20%.

Therefore, the reduced rate of 5% won't apply to supplies of electric vehicle charging points in public places. It only applies to ongoing supplies of electricity to a person’s house or building which is less than 1,000 kilowatt-hours a month.

VAT recovery for directors and employees

If you're a director/employee and charge an electric vehicle, which is used for business at your home, you cannot claim the VAT. This is because the supply of electricity will have been made to the individual not the business.

Where you charge a company electric vehicle used for both business and private purposes at your business premises you must keep a record of it’s business and private mileage. This will be necessary to work out the proportion of business use for the vehicle. There are two methods that can be used to reclaim the VAT.

Claim the full amount of VAT charged on the electricity supply used to charge the vehicle (including private use). However, you'll need to include a charge on the VAT return to reflect private use.
Alternatively, you can just recover the VAT relating to the business element.

Tax treatment of electric vehicle charging points - installation costs

Your business can potentially claim 100% of the installation costs of an electric vehicle charging point. Qualifying expenditure can include the charging point itself and alteration of land for installing the charging point. Plus it can also include any costs of modification to supply electricity to the charging point.

Some of the expenditure may also qualify for the super deduction equating to a 130% enhanced deduction of the total cost. This proposal was introduced in April 2021 and only valid for purchases made during the period 1 April 2021 to 31 March 2023. However, it may still be relevant if your company’s accounting period straddles this period.

In order to qualify for the deduction, expenditure must be on a new, unused electric vehicle charging - not second-hand charging facilities.

Tax treatment of electric vehicle charging points - employee usage

Where someone is provided with workplace facilities for charging an electric vehicle no taxable benefit in kind arises on the cost of providing electricity at these facilities.

The exemption covers the cost of electricity, the employer's cost of providing these facilities and any associated services.

In order to qualify, the following conditions must be met:

The charging facilities must be provided at or near your workplace. The exemption does not apply where the charging facilities are at your home.
Charging must be available to either all employees generally or all employees generally at the workplace.

It is important to note, there will be a taxable benefit in kind if charging facilities are offered as part of a flexible remuneration package.

Additionally, charging facilities must be for a vehicle in which the employee is either the driver or a passenger.

An example

Mr and Mrs X work for different employers in a similar location and so take turns to drive each other to work. Mr X’s employer spends £6,000 to install charging points in their office car park.

Mrs X’s employer does not provide charging points at her workplace. When Mr X makes use of the charging facilities at his office’s car park, the benefit of the electricity used, the use of the charging point and any connected services are exempt.

On days when Mrs X drives them both, the car is parked at Mr X’s office. The use of the charging facilities remains exempt as Mr X is a passenger.

Other points

The exemption does not apply to the reimbursement or payment of an employee’s personal costs for charging their vehicle away from the employer’s premises. For example, it does not apply where the employer reimburses the costs of charging their vehicle at a motorway service station.

However, where electricity costs are reimbursed for charging the vehicle away from the employer’s premises and the vehicle is used on a business journey, it may be possible to claim a mileage allowance.

Last and by no means least, any electricity or connected services provided by an employer for a company car or van is an exempt benefit in kind.