Home electricity reimbursements for charging a company car

There were 720,000 company cars on the road in the 2021/22 tax year of which 17% (122,400) were fully electric cars.   

An employee can charge their company car at the employer’s premises and not incur a benefit in kind, however I am often asked by employers “can I reimburse an employee their home electric charging costs for their company car?” The answer to this question had been in dispute with HMRC until this week! 

HMRC have made a U-turn on the tax position of reimbursements made by employers, in relation to home electricity company car charging expenses.   

What has changed?

Previously the guidance explained that where a company car had mixed business/private use, any reimbursements of home electricity was subject to PAYE, with the employee able to make a separate claim for tax relief for business journeys. 
 
The guidance has now been changed to reflect the tax industry’s general view that reimbursement of home electricity charging expenses in connection with a taxable company car are not subject to income tax and NIC. 

Therefore, employers can make reimbursement of home electricity charging costs tax and NIC free.  We recommend an employee submits an expense claim with evidence of the home electric charging costs. The tax and NIC free amount is only available in relation to company car charging, and is not available for employees’ privately owned vehicles.