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Home Charging and company cars

HMRC clarifies tax on home charging of company cars

HMRC has recently revised its guidelines on the taxation of home charging for company cars and vans.

Previously, HMRC had maintained a stance that made the reimbursement of costs for charging a company-owned electric car at a residential property a taxable earning. In other words, if your employer covered the expense of juicing up your company EV at home, you'd likely see it reflected on your tax bill.

However, the winds of change have blown through HMRC's corridors, leading to a significant shift in their stance. The tax authority has now updated its guidance, embracing a more generous interpretation of the rules surrounding the home charging of electric company vehicles.

The key to this transformation lies in Section 239 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). This legal provision offers exemptions for payments and benefits related to company cars and vans, including things like repairs, insurance, and road tax.

In the past, HMRC argued that the reimbursement for charging a company vehicle at a residential address didn't quite fit under this exemption umbrella. However, the tax authority has had a change of heart. HMRC's revised stance now recognises that covering part of your domestic energy bill, which is used to charge your company car or van, falls within the bounds of Section 239 ITEPA 2003.

What does this mean for you, the EV-driving employee?

Well, it's fantastic news. If your employer reimburses you for the electricity used to charge your company vehicle at home, you can now breathe a sigh of relief. No longer will you see an extra tax charge lurking in the shadows.

However, there's a catch

That electricity reimbursement must be exclusively tied to charging your company car or van. Employers need to ensure that any payments made for electricity costs are directly related to keeping their company vehicles fueled up.

This new development brings clarity and a sense of fairness to the world of electric company cars and tax obligations. HMRC's decision to align with the evolving landscape of electric vehicles is not only forward-thinking but also a welcome relief for employees and businesses that have embraced green transportation.

If you require any more information about this or any other aspect of electric car use or ownership, then please just get in touch

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