In the 22 March 2018 issue of this newsletter, we highlighted some of the inconsistencies surrounding the taxation of electric cars and the provision of charging facilities. Under the legislation as it currently stands, if an employee has an electric or hybrid company car or van and charges it at work, the provision of electricity is not treated as ‘fuel’, and consequently, no benefit-in-kind fuel charge arises. By contrast, if an employee uses an employer-provided charging point to charge their own vehicle, the electricity provided is taxed as a benefit in kind. Chancellor, Philip Hammond, promised in his Autumn 2017 Budget to address this and the legislation to give statutory effect to this promise has now been published in draft.
One of the major obstacles to the widespread adoption of all-electric or plug-in hybrid vehicles is the worry as to where vehicles can be charged. The new exemption will remove any liability to tax that would otherwise arise where an employee uses charging facilities provided by the employer at or near the place of work to charge his or her own car. It is hoped that this will encourage employers to provide charging points, enabling employees to charge electric vehicle while at work.
For the exemption to apply, the charging facilities must be provided ‘at or near’ the workplace (mirroring the requirement for the workplace parking exemption). In common with many exemptions, the facilities must be available to employees generally; however, if there are multiple sites, it is not necessary to provide a charging point at each of them. Further, the employee does not need to be the driver to benefit from the exemption. It also applies if the charging point is used to charge a vehicle in which the employee is a passenger (for example, if a spouse gives an employee a lift to work and charges the car at the employee’s workplace).
The exemption, however, does not apply if the employer reimburses the costs of charging a vehicle away from the workplace.
The new exemption will take effect from 6 April 2018.
Written by the Tax Advice Network