HMRC has made a change to its policy that affects employers who reimburse employees for the electricity used to charge company vehicles at home. As a result of this policy adjustment, there is no longer a Benefit in Kind (BIK) tax charge on such reimbursements.
The previous position…
Previously, HMRC’s stance was that the current exemption applying to repairs, road tax and insurance didn’t extend to reimbursing electricity costs incurred when charging company vehicles at home.
However, this position has now evolved. According to the revised policy, HMRC now recognizes that when an employer reimburses a portion of a domestic energy bill related to charging a company car or van at home, it falls within the exemption. This means there won’t be a separate BIK tax charge when employers reimburse employees for the electricity used to charge their company vehicles at home.
How to claim it?
To benefit from this exemption, it’s crucial to demonstrate that the electricity was indeed used for charging the company car or van, and reimbursements should exclusively cover the charging of the employee’s company vehicle, not other electricity usages.
In our view, the best way of doing this would be to utilise the functionality of most charging apps, which allow you to input the cost per kwh you suffer. This will then automatically calculate the actual cost of each charge.
You can then put in an expense claim each week / month similar to one you would submit to claim business mileage.
Your next steps
If you would like to discuss the changes and how they may impact you, call the team now on 01772 204102, we’ll be happy to help.