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Claiming electric car charging: Lotties online bookkeeping advice blog

In the ever-evolving landscape of

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electric vehicles (EVs), HMRC has recently issued updated guidelines regarding the home charging of company cars and vans. This amendment, detailed in Employment Income Manual EI

M23900 and National Insurance Manual NIM0664, provides clarity on how these benefits are treated for tax purposes.

Let's delve into the changes and what they mean for employers and employees alike.

A Change in Interpretation

Previously, HMRC took the stance that reimbursing costs associated with charging a company car or van at a residential property was not covered by the exemption under Section 239 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA). This exemption, traditionally, covered various aspects of company vehicles, including vehicle repairs, insurance, and Vehicle Excise Duty.

However, following a comprehensive review, HMRC has revised its interpretation. They now acknowledge that reimbursing a portion of a domestic energy bill used for charging a company car or van falls within the exemption provided by Section 239 ITEPA 2003.

This means that no additional tax charges will apply when an employer reimburses an employee for the electricity costs associated with charging their company vehicle at home. However, there is a crucial condition attached to this exemption: Employers must be able to demonstrate that the electricity expenses were solely for charging the company car or van.

What Does This Mean for Employers and Employees?

For employers, this change in interpretation offers a welcome relief. It means that they can support their employees who charge their company vehicles at home without incurring additional tax burdens. This could be seen as a cost-effective way to promote eco-friendly company cars and encourage the use of electric vehicles.

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However, it's important for employers to keep meticulous records and ensure that any reimbursements made directly relate to the electricity expenses incurred for the charging of company vehicles. Clear documentation will be crucial in demonstrating compliance with HMRC guidelines.

For employees, this development is beneficial, as it removes tax implications when they charge their company cars or vans at their residential properties. It simplifies the process and encourages the use of electric vehicles, which are not only more environmentally friendly but also cost-effective in the long run.

In conclusion, the updated HMRC guidelines regarding home charging of electric company cars and vans provide a more favourable landscape for both employers and employees. It promotes the adoption of electric vehicles and supports eco-conscious initiatives while simplifying tax considerations in the process. However, adherence to clear record-keeping practices is essential to demonstrate compliance with these guidelines.

If you have been looking for a Bookkeeper near you, then Lottie Saunders Bookking is the right bookkeeper for you. She has extensive knowledge of UK tax and will always submit your accounts in the most cost effective way that is possible. Contact her now to find out more. Lottie's Bookkeeping services are available online or around the Surrey area.

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