Tax treatment for charging company vehicles at home

Tax treatment for charging company vehicles at home

HMRC have amended their guidance on the tax treatment of charging electric company cars and vans at residential properties.

The costs incurred of charging company cars and vans are now treated as a tax-free benefit, whereas in the past HMRC said that where an employer reimburses their employee for the cost of charging a company-owned, wholly electric car that is available for private use, the reimbursement was taxable as earnings.

HMRC has now changed this and updated their internal manuals to reflect the revised interpretation regarding home charging of electric company cars.

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, but have recently confirmed as follows:

‘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’.

The exemption will however only apply where it can be demonstrated that the electricity was used to charge the company car or van, and employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of their vehicles.