Our Friends Electric

At last, some bright spark at HMRC has given some consideration to the rules regarding the recharging of electric cars. A Consultation paper outlines the HMRC draft guidance, follow the link here.

If you are currently, or might in the future be affected by this, please log and on respond.

In short, workplaces charging for personally owned cars and vans will be exempt providing the qualifying conditions are met. Those have been suggested as:-

  • The charging point must be dedicated to charging all electric or plug in hybrids.
  • The point must be at premises under the control of the employer.
  • Charging must be available to all employees generally, or at a specific location.

Reimbursement of charging costs incurred at employee’s homes will not be within the exemption, and of course the benefit will remain taxable if it is offered in conjunction with an optional remuneration agreement, which brings us on to…

OpRA (a.k.a. salary sacrifice, a.k.a. flexible benefits)

I can hear the fat lady singing good and loud now….and the tune is optional remuneration arrangements.

The legislation changes, effective from 6 April 2017 for most benefits, will be relevant for the 2017/18 forms P11D, and the time to prepare those forms has arrived!

From last April, a benefit is provided for an employer under an OpRA scheme where either:-

A  – the employee gives up the right to receive earnings in exchange for a benefit, or

B  – an employee agreed to be provided with a benefit rather than an amount of earnings.

Where a benefit is provided under either A or B, it should be valued as the greater of the amount of salary given up or the charge that would be due under the benefits code and reported to HMRC.

The general tax exemptions will not apply from 6.4.17 to any benefit provided via Opra/salary sacrifice/flexible benefits, except for the following:-

  • Cycles and cyclist’s equipment
  • Qualifying childcare vouchers
  • Registered pension scheme contributions
  • Retraining courses
  • Employer provided childcare

[New entrants to the childcare voucher scheme were originally going to cease to qualify for tax relief from this month, but the deadline has recently been extended to October 2018].

When preparing your forms P11D this year, even where you may not feel you have a salary sacrifice scheme, please take a moment or two to consider if any staff have agreed a salary reduction with you in exchange for perhaps a car park space near work or similar, as these agreements will be considered OpRAs and will have to be reported on the P11Ds you are about to draft.

If you would like to discuss this blog further, please contact Carol Watters. Alternatively, please call 01772 821021.