HMRC has amended guidance on the tax treatment of electric charging of company cars and vans at home. It has been confirmed that the costs of charging should now be treated as a tax-free benefit.
In the past, HMRC’s stance has been that where an employer reimburses their employee for the cost of charging a company-owned, wholly electric car that is also available for private use, the reimbursement was taxable as earnings.
Following a review, HMRC has now changed its position, and now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van at a residential property, will fall within the exemption provided by section 239 ITEPA 2003, and has updated the EIM23900 manual to reflect their revised interpretation.
Section 239 ITEPA 2003 provides an exemption on payments and benefits provided in connection with company cars and vans. This means that the legislative provision therefore exempts aspects such as vehicle repairs, insurance, and road tax. HMRC have confirmed that they will now accept reimbursing part of a domestic energy bill within the exemption provided by section 239 ITEPA 2003.
This means that no separate charge to tax under the benefits code will arise where an employer reimburses an employee for the cost of electricity to charge their company car or van at home, given that it can be demonstrated that the electricity was used for the sole purpose of charging a company vehicle.
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