Charging company electric vehicles – Costs, reimbursements, and tax implications

With the rise of electric vehicles (EVs), many company directors and employees charge their cars at home.

If you have a company-provided EV and charge it at home, you need to determine the cost of the electricity used for business purposes. There are a few ways to do this:

• Smart chargers or separate meters – Some EV chargers and smart meters track electricity usage specifically for charging your car, allowing precise calculation.
• Tariff-based estimation – If no separate meter is available, you can estimate the cost by keeping a record of the vehicle’s electricity consumption and multiplying it by your electricity tariff at the time of charging.
• HMRC’s Advisory Electricity Rate (AER) – The HM Revenue & Customs (HMRC) AER can be used as a standard rate to reimburse business mileage. The current rate is 7p per mile.

Can a company reimburse employees for home charging?

Yes, a company can reimburse employees for electricity costs incurred when charging a company vehicle at home, provided that:

• The reimbursement is based on actual electricity costs incurred for business use, or
• The employer uses the HMRC AER to reimburse business mileage.

If the employer does not reimburse the electricity cost, the employee can claim a tax deduction against earnings in their tax return.

However, the deduction must be based on actual costs and not the AER.

Employers should ensure that any reimbursement is accurately calculated based on real costs to avoid potential tax issues.

Is there a taxable benefit when charging a company EV at home?

There is no taxable benefit when an employer reimburses an employee for the cost of electricity used to charge a company car at home, as long as the reimbursement is solely for business use.

However, if the car is used for private mileage, any reimbursement for private charging would be treated as taxable earnings.

Can employees claim mileage allowances for EVs?

For business mileage driven in an employee-owned EV, the employer can reimburse mileage using Authorised Mileage Allowance Payments (AMAPs).

If the employer reimburses less than the published AMAP rates, the employee may claim Mileage Allowance Relief (MAR) for the difference.

For company cars, employers may use the HMRC AER (7p per mile) to reimburse electricity costs.

If the employer does not reimburse, the employee can claim a tax deduction based on the actual cost per mile.

What if an employer provides workplace charging?

Employers providing charging facilities at or near the workplace benefit from a tax exemption which covers:

• The cost of electricity
• The cost of providing charging facilities
• Any related services

This means employees can charge their cars at work without a taxable benefit arising, provided the facilities are available to all employees. If charging is restricted to specific employees, a taxable benefit may arise.

What if an employer pays for public charging?

• If an employer directly pays for public charging, there is no taxable benefit.
• If an employer reimburses an employee for charging at a public station, this may be taxable unless it is exclusively for business use.

If you have questions about claiming or reimbursing EV charging costs, speak with our team of professional accountants today.