Electric charging points – Is there a tax liability?

Electric and hybrid vehicles have been becoming more popular over recent years as we look at how we can reduce our impact on the environment while going about our day-to-day lives.

Earlier this month the COP26 summit took place in Glasgow and world leaders made a series of pledges to reduce emissions and our impact on the climate.

The Government has devised a push to encourage drivers to ‘go electric’. The Transport Secretary, Grant Shapps, announced an extension to a £50 million Government fund to install electric charge points.

The fund aims to help small business to gain access to the workplace charging scheme and provide grants to meet up to 75% of the cost of installing electric charging points at domestic premises.

While tax advantages are available where employees opt for an electric company car, does a tax charge arise if an employer provides a charging point to enable employees to charge their own cars at work?

Workplace electric vehicle charging

A tax exemption applies to remove the tax charge that might potentially arise where an individual charges the battery of a vehicle that is used by the employee.

Private vehicles

The exemption means that an employee can charge their own car, or one that they are driving or a passenger in, using a workplace charging point free of any associated benefit in kind tax charge.

There is no requirement that the electricity provided is used for business journeys; the exemption applies regardless of whether the charge powers business or private journeys.

The exemption covers:

the cost of the electricity;
the cost to the employer of providing the charging facilities; and
any connected services.

However, the exemption only applies if the following conditions are met:

the charging facility is provided at or near the employee’s place of work;
charging must be available to all the employees generally or those at the particular workplace should they wish to use the facilities; and
the vehicle which is charged is one in which the employee is the driver or a passenger.

Company vehicles

No tax charge arises if an employee uses a workplace charger to charge an electric company car. There would be no tax charge for electricity provided for business journeys.

However, as electricity is not treated as a ‘fuel’ for company car purposes, the use of a workplace charging facility does not trigger the fuel benefit charge if the charge provided powers private journeys.

Offsite charging

The tax exemption does not apply to the reimbursement or payment of an employee’s personal expenditure if charging a battery of a private vehicle away from the employer’s premises, for example, at a motorway service station.

Where the vehicle is used for business journeys, mileage allowances may be paid tax-free up to the approved amount.

However, no tax charge arises in respect of the provision of electricity for a company car for private mileage as electricity is not treated as a fuel for the purposes of the fuel benefit charge.