Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Employment Income Manual

Car benefit: special cases - issues relating to electric cars

Provision Company car made available for private use Employee’s car used for business 
Employer allows cars to be recharged from a vehicle charging point at work. No taxable benefit - electricity does not sit within the meaning of fuel so the Fuel Benefit Charge does not apply. And there is no further benefit charge as s239(4) ITEPA 2003 specifically excludes a benefit connected with a taxable car.  Taxable benefit based on cost to the employer.
Employer pays for a vehicle charging point to be installed at the employee’s home.  No taxable benefit because of S202(1) ITEPA 2003 (and S239 (4)). Taxable benefit based on cost to the employer.
Employer pays for charge card of £100 per year to allow individuals unlimited access to local authority vehicle charging point.  No taxable benefit because of S202(1) ITEPA 2003 (and S239 (4)). Taxable benefit based on cost to the employer.
Manufacturer leases battery separately to the car.  Cost of battery forms part of the list price - car will not go without it so it must be integral (like wheels).  Not taxable.
List price includes cost of battery  Use list price  
List price does not include cost of battery Use notional list price   
Employer pays to lease a battery for a privately owned car   Taxable benefit based on cost to employer 
Mileage allowances None - advisory fuel rates are based on the average price of fuel per mile - electricity is not a fuel Authorised Mileage Allowance Payments (AMAPs), and, if the employer pays less than the published rates, may claim tax relief under Mileage Allowance Relief (MAR).

Tax treatment when electric cars are charged

Employee charges car at home: electricity provided by employer

Flowchart

Stage Action Outcome
Stage 1 Who owns the car? If company car, no additional benefit
    If employee’s car, go to stage 2
Stage 2 For what use is the car? If private use only, the cost of electricity used is taxable as a benefit-in-kind
    If business use only or mixed use, the total cost of electricity used is taxable as a benefit-in-kind. There is no matching deduction. Plus AMAPs and/or MAR for business miles travelled

Employee charges car at home: their employer reimburses the electricity costs

Flowchart

Stage Action Outcome
Stage 1 Who owns the car? If company car, go to stage 2
    If employee’s car, go to stage 3
Stage 2 For what use is the car? If business use only, go to stage 2a
    If private use only or mixed use, reimbursement is taxed as earnings. Employee is entitled to a deduction for the cost of business miles travelled
Stage 2a What is the date of charging the car? If before 6 April 2016, dispensation or record on P11D with a matching deduction
    If after 5 April 2016, covered by section 289A Self Assessment exemption
Stage 3 For what use is the car? If private use only, reimbursement is taxed as earnings
    If business use only or mixed use, go to stage 3a
Stage 3a How is reimbursement calculated? If by reference to mileage, AMAP/MAR rules apply for business miles travelled
    If a flat-rate amount, reimbursement is taxed as earnings plus AMAP or MAR for business miles travelled

Employee charges car at home using their own electricity

Flowchart

Stage Action Outcome
Stage 1 Who owns the car? If company car, go to stage 2
    If employee’s car, go to stage 3
Stage 2 For what use is the car? If private use only, no tax implications
    If business use only or mixed use, employee is entitled to section 337/8 deduction for electricity cost of business miles travelled
Stage 3 For what use is the car? If private use only, no tax implications
    If business use only or mixed use, AMAPs and/or MAR for business miles travelled

Employee charges car at work

Flowchart

Stage Action Outcome
Stage 1 Who owns the car? If company car, no additional benefit
    If employee’s car, go to stage 2
Stage 2 For what use is the car? If private use only, the cost of electricity used is taxable as a benefit-in-kind
    If business use only or mixed use, the total cost of electricity used is taxable as a benefit-in-kind. There is no matching deduction. Plus AMAPs or MAR for business miles travelled