Policy paper

Workplace charging for all-electric and plug-in hybrid vehicles

Published 6 July 2018

Who is likely to be affected

Employers providing facilities for charging vehicles and electricity to employees recharging all-electric or plug-in hybrid vehicles at the workplace, and employees receiving the benefit.

General description of the measure

This measure introduces legislation to exempt from Income Tax and National Insurance contributions any liability arising from the provision of charging facilities (including electricity) to employees recharging all-electric or plug-in hybrid vehicles at or near the workplace, where facilities are made available generally to the employer’s employees. It does not cover reimbursements for charging elsewhere paid for by the employee.

This measure does not apply to taxable cars and vans (chargeable under the car or van benefit charge respectively). These are taxable as benefits in kind, and the provision of charging facilities and electricity are treated as connected costs already subject to a separate exemption.

Policy objective

The measure will incentivise the take-up of cleaner, less polluting vehicles to support air quality initiatives. The government announced this measure to encourage employers to provide charging facilities for all-electric and plug-in hybrid vehicles at the workplace.

Background to the measure

Where an employer provides facilities for charging their employees’ all-electric or plug-in hybrid vehicles at the workplace, this is currently treated as a taxable benefit in kind subject to income tax for employees and employer Class 1A National Insurance contributions.

The government announced in Autumn Budget 2017 that it would introduce an exemption to remove any income tax or National Insurance contributions liability for charging electric vehicles at work with effect from 6 April 2018.

Draft guidance for employers was published on 12 April 2018 – this does not fully reflect the legislation being published and will be updated in the summer. This will support air quality initiatives by incentivising the purchase of all-electric and plug-in hybrid vehicles by individuals.

There is already an exemption for the provision of charging facilities which applies to taxable cars and vans.

Draft legislation was published for consultation on 6 July 2018.

Detailed proposal

Operative date

The measure will have effect from 6 April 2018.

Current law

Liability for treatment as a taxable benefit in kind currently falls within Chapter 10 of Part 3 of the Income Tax (Earnings & Pensions) Act 2003 (ITEPA).

Proposed revisions

Legislation will be introduced in Finance Bill 2018-19 to exempt the benefit in kind arising from the provision of charging facilities at or near the workplace. This will introduce new section 237A into Chapter 3 Part 4 ITEPA. No changes to National Insurance contributions legislation are required.

Summary of impacts

Exchequer impact (£m)

2018 to 2019	2019 to 2020	2020 to 2021	2021 to 2022	2022 to 2023	2023 to 2024
negligible	negligible	negligible	negligible	negligible	negligible

This measure is expected to have a negligible impact on the Exchequer.

Economic impact

This change is not expected to have any significant economic impacts.

Impact on individuals, households and families

This change is expected to affect a small number of those individuals who use an electric/plug-in hybrid vehicle which are not subject to the car or van benefit charge. This is because not all workplace locations are able to provide parking spaces or charging facilities

The measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

This change will impact those sharing protected characteristics which are representative of employees who commute to their workplace using an electric or plug-in hybrid vehicle. They will be in working age groups.

Impact on business including civil society organisations

This measure is expected to have a negligible impact on businesses. Businesses that provide charging facilities for the employees will see a one-off cost associated with familiarisation with the changes. They will also see a small on-going saving through the simplification of not having to report the value of the benefit to HMRC.

This measure is designed to support air quality initiatives by encouraging employers to provide charging facilities so that more employers choose cleaner, less polluting cars. Therefore there may be some costs associated with this provision.

HMRC does not have enough data to assess how much air quality will improve as it will depend on the number of employers who offer charging facilities to their employees.

There is no impact on civil society organisations.

Operational impact (£m) (HMRC or other)

Negligible – further guidance will be required to replace the temporary guidance provided to employers on 12 April 2018. HMRC is aiming to publish draft guidance for consultation for Budget 2018.

Other impacts

Wider environment impact and carbon assessment: this measure supports air quality initiatives which in turn affect wider environmental and carbon assessment impacts.

HMRC does not currently have enough data to quantify the effect of this measure on these. All-electric and plug-in hybrid vehicles currently represent a relatively small but growing proportion of market share.

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through communication with affected taxpayer groups.

Further advice

If you have any questions about this change contact the Employment Income Team at email: employmentincome.policy@hmrc.gsi.gov.uk.