Electric Vehicle Chargers

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Tax Implications of Purchasing Electric Vehicle Chargers

If you run a limited company and are thinking about purchasing an electric car for one of your employees (incl. directors), then you should also be thinking about electric vehicle (EV) chargers and the tax implications of purchasing them via your company. This article looks at the various tax considerations when purchasing EV chargers, including if you installing it on personal, rather than company, property. We have broken each tax into its own section.

Purchase and Installation of an EV charger

Corporation Tax

If the business is purchasing and installing a brand new EV charger, whether on business premises or at an employees residence then this will usually qualify as tax deductible business expense. 

Depending on the total cost/value, an accountant may wish to capitalise the asset. If capitalising, an EV charger would qualify for 100% FYA, however, the expenditure is likely to also qualify for the 130% super deduction and so if available, this approach is much more tax efficient and so should be taken over 100% FYA.

VAT

If installing an EV charger at an employee’s home, the recovery of VAT will be subject to similar rules around private usage. That is that if an element of private use is available, a reasonable adjustment should be made to the amount of VAT being reclaimed. For example, if an EV charger was being installed and the electric company car was being used for an estimated 75% private and 25% business journeys, then only 25% of the VAT should be reclaimed.

If installing an EV charger on business premises, for example in the parking lot at your warehouse, then the full amount of VAT will be reclaimable.

Benefit in Kind/PAYE/P11D

If an employee has a company car then the supply of an electric vehicle charging point at an employee’s home is an exempt benefit. Meaning there are no benefit in kind (BIK) or P11D considerations.

If an employee has a personal car, which is made available for business use, then the cost of an EV charging point is a taxable benefit, calculated based on the cost to the employer.

More information on special cases relating to electric cars can be found directly in the Employment Income Manual here.

Tax treatment when electric cars are charged

If you’re thinking about installing an EV charger then it is also worth pointing out the tax implications around using them to charge vehicles. For this there are several possible scenarios that are outlined in the Employment Income Manual that we'll share below.

Employee charges car at home: Electricity provided by employer

Hours of business use per month Flat rate per month
25 to 50 £10
51 to 100 £18
101 and more £26

In the above example it's worth noting that if an employer is supplying the electricity directly then it should be able to reclaim the VAT on the supply.

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

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 taxes 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

In the above example it's worth noting that VAT cannot be reclaimed if an employer is reimbursing expenses.

Employee charges car at home using their own electricity

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 taxes 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

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