Electric Cars – How Charge Location Affects Your Tax
As the world shifts towards greener alternatives, electric cars are becoming increasingly popular. However, this transition brings with it a new set of tax implications that can be quite complex to navigate. In her session Electric Cars - Tax Implications of Going Green, Emma Rawson was able to shed light on the tax implications of charging electric cars at work, home, or on-the-go.
Charging at Work
Emma explained that the most straightforward scenario is charging an electric car at the workplace. Since April 2018, there has been a statutory exemption for workplace charging, meaning there's no benefit-in-kind (BIK) provided certain conditions are met. This exemption applies regardless of whether the car is company-owned or personally owned, and irrespective of its usage for business or personal miles. However, the charging point must be at or near the premises and available to all employees.
Charging at Home
Things get more complicated when it comes to charging at home, according to Emma. If an employer installs a charging point at an employee's home for a company car, there's no BIK. However, if the charging point is installed for a personally owned car, a BIK arises. It's also important to note that the employer can claim a 100% first-year allowance for installing the charging point, but this is due to expire in April 2025.
The tax treatment for charging on the go depends on whether the car is company-owned or personally owned. For company cars, HMRC generally doesn't favour reimbursements for benefits-in-kind. They suggest that to qualify for Section 239 exemption, the employer should have a separate electricity supply to the employee's house in the employer's name, which is impractical in most cases.
VAT charges can vary depending on where the car is charged. Charging from a domestic supply at home attracts a reduced rate of 5%, while charging at work or on the go incurs a standard rate of 20%. Businesses can recover VAT for charging at their premises, but not if it's installed at the employee's home.
Although the tax implications of charging electric cars can seem daunting, having someone like Emma give you an understanding of the nuances can help you make informed decisions. As the landscape continues to evolve, it's crucial to stay updated on any changes in legislation or HMRC guidelines. Always consult with a tax professional to ensure compliance and maximise potential benefits. You can watch the below clip from Emma’s session:
To watch the full session by Emma Rawson, just click here. In the session, Emma covers the above as well as:
Business deductions/capital allowances
Benefit in Kind charges
Purchase vs lease – which is best?
Tax treatment of other kinds of vehicles (including hybrid cars and electric vans).
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.