Electric cars continue to become more and more popular, with recent estimates suggesting one is registered every 60 seconds in the UK. However, until recently, HMRC’s position on charging electric company cars at home was a cause for concern.

HMRC had previously argued that, if an employee charged an electric company car or van at home, any reimbursement of that cost by the employer was potentially taxable as income.

Following representations by a number of bodies, HMRC have now changed their view. As set out in their most recent Employer Bulletin publication, HMRC will now accept that reimbursing part of an employee’s domestic energy bill for charging a company car or van is exempt from tax.

As a result, there should be no tax charge where an employer reimburses an employee for the cost of charging a company car or van at home. HMRC have updated their guidance in the Employment Income Manual EIM23900 and National Insurance Manual NIM0664 to reflect this change.

However, HMRC warn that this will only apply provided it can be shown that the electricity cost relates solely to the charging of the company car or van. It will therefore be important to provide support for the amount reimbursed, to show that no other element of the bill is being paid by the employer.

 

This article reflects the position at the date of publication (14 November 2023). If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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