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Tax rules introduced earlier this year determine that where an employer provides an employee with facilities to charge their own all-electric or plug-in hybrid vehicles at (or near) the workplace, no taxable benefit will arise. The exemption applies regardless of whether the employee uses the “fuel” (electricity) for business use, personal use, or both.
The legislation came into effect in February 2019, but applies retrospectively from 6 April 2018. It will hopefully encourage employers to provide charging facilities at workplaces and be another advantage of driving electric vehicles over petrol or diesel.
A number of conditions have to be satisfied for the exemption to apply:
The charging facilities must be provided “at or near” an employee’s workplace.
The exemption will not apply where: (i) the charging facilities are at the employee’s home; or, (ii) the employer reimburses an employee’s expenses in respect of charging their vehicle away from the workplace i.e. at a motorway services.
Charging facilities must be made available to either: (a) all employees generally; or, (b) all employees generally at the employee’s workplace.
The benefit must not be offered in conjunction with any optional remuneration arrangement.
The employee must be either the driver or the passenger of the vehicle which uses the workplace charging facilities.
The vehicle must not be a company car or van.
The provision of electricity for charging a company vehicle is already exempt under pre-existing legislation.
It is common practice for employers to reimburse employees in respect of business miles travelled in their own vehicles. These payments are known as Mileage Allowance Payments (MAPs). MAPs are exempt from tax up to a certain level, known as Approved Mileage Allowance Payments (AMAPs). Employees are also entitled to Mileage Allowance Relief (MAR) if they receive MAPs from their employer which are less than the AMAPs for their type of vehicle for the relevant tax year.
Following the change in law, employees using their own electric cars for business purposes are still entitled to AMAPs and MAR in the same way as those using petrol or diesel vehicles. In other words, the new exemption will not impact existing reliefs and allowances in respect of the use of vehicles.
This endorsement of clean energy initiatives by the Government through the tax system is a positive step, which will hopefully lead to further developments in this area.
Electric vehicles are a key component of the UK’s strategy for achieving a carbon neutral future. Our electric vehicles hot topic explores what this means for the energy market and its investors. Read more about electric vehicle investment opportunities in our whitepaper – plugging into electric vehicles.
If you would like to discuss the impact of this further, please do contact your regular adviser in the TLT Corporate Tax team or Mark Braude on 0333 0060376 or at firstname.lastname@example.org.
05 August 2019
by Mark Braude
News 20 MAY 2022