New guidance from HMRC on home-charging of company electric and hybrid vehicles

HMRC has recently provided amended guidance on the tax treatment of the costs of charging company cars and vans at home.

Where reimbursed by the employer, the costs of charging electric and hybrid company vehicles at home are now treated as a tax-free benefit, in contrast to their previous treatment as taxable earnings.

HMRC has updated the EIM23900 manual to reflect this revised guidance. Section 239 ITEPA 2003 details an exemption on payments and benefits provided in connection with company cars and vans. This legislative provision therefore exempts aspects such as vehicle repairs, insurance, and road tax. HMRC previously maintained that the reimbursement of costs in relation to charging a company car or van at a residential property was not caught by this exemption. HMRC confirm that, ‘Following a review of our position, HMRC now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van, will fall within the exemption provided by section 239 ITEPA 2003.’

This means that there is now no separate charge to tax under the benefits code where an employer reimburses the employee for the cost of electricity to charge their company car or van at home. Employers and employees should note that the exemption will only apply when it can be demonstrated that the electricity was used only to charge the company car or van. Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the company vehicle charging costs.

If you require advice on tax-free benefits of any kind for your business, contact one of our team of accountants today.