Ask the Expert: How to deal with UK tax anomalies in electric car charging facilities? Ask the Expert: How to deal with UK tax anomalies in electric car charging facilities?

Ask the Expert: How to deal with UK tax anomalies in electric car charging facilities?
14 Sep 2018

Q. We provide our UK employees with facilities to recharge their electric vehicles at work, regardless of whether it is a company, or their own, car. But offering the same charging facility to both parties gives rise to different treatments when looking at whether it is a benefit or not. Are there any plans to change this situation?

You are right about this anomaly, which means that if you provide employees with both an electric car charging facility and the electricity, there are two treatments:

  1. Company car = It is not a benefit, courtesy of Section 239 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) ‘Payments and benefits connected with taxable cars and vans’;
  2. Private car = It is a benefit, thanks to the fact there is no corresponding Section in the Act to say otherwise. 

During the UK Government’s 2017 Autumn Budget, it was announced that this anomaly would be corrected from April 2018 as part of measures to support and encourage the take-up of all-electric and plug-in hybrid vehicles.

The legislation to this end is contained in the draft Finance Bill 2018/19, the consultation on which ended on 31 August 2018. Its final contents will be subject to confirmation in this year’s Autumn Budget.

Clause two of the Bill inserts a new Section 237A into ITEPA entitled ‘Vehicle-battery charging’. It will be included in the forthcoming legislation directly after Section 237, which is all about exemptions for travel-related provisions such as parking at or near the workplace.      

So, in short, things are scheduled to change during this tax year. Thanks to the new regulations, no employee will be subject to tax when recharging their car and employers will not be subject to Class 1A National Insurance considerations if they provide “facilities” that enable their staff to do so at or near their workplace. In this context, the word “facilities” refers to the provision of the electricity.

In other words, the anomaly with regard to treatment here will thankfully have been corrected.

Ian Holloway 

Ian Holloway is head of legislation and compliance at Cintra HR and Payroll Services. He was involved in processing payrolls large and small from organisations across all sectors until 2011 when he started helping to educate the profession by developing course material, newsletters and face-to-face presentations.

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Q. We provide our UK employees with facilities to recharge their electric vehicles at work, regardless of whether it is a company, or their own, car. But offering the same charging facility to both parties gives rise to different treatments when looking at whether it is a benefit or not. Are there any plans to change this situation?

You are right about this anomaly, which means that if you provide employees with both an electric car charging facility and the electricity, there are two treatments:

  1. Company car = It is not a benefit, courtesy of Section 239 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) ‘Payments and benefits connected with taxable cars and vans’;
  2. Private car = It is a benefit, thanks to the fact there is no corresponding Section in the Act to say otherwise. 

During the UK Government’s 2017 Autumn Budget, it was announced that this anomaly would be corrected from April 2018 as part of measures to support and encourage the take-up of all-electric and plug-in hybrid vehicles.

The legislation to this end is contained in the draft Finance Bill 2018/19, the consultation on which ended on 31 August 2018. Its final contents will be subject to confirmation in this year’s Autumn Budget.

Clause two of the Bill inserts a new Section 237A into ITEPA entitled ‘Vehicle-battery charging’. It will be included in the forthcoming legislation directly after Section 237, which is all about exemptions for travel-related provisions such as parking at or near the workplace.      

So, in short, things are scheduled to change during this tax year. Thanks to the new regulations, no employee will be subject to tax when recharging their car and employers will not be subject to Class 1A National Insurance considerations if they provide “facilities” that enable their staff to do so at or near their workplace. In this context, the word “facilities” refers to the provision of the electricity.

In other words, the anomaly with regard to treatment here will thankfully have been corrected.

Ian Holloway 

Ian Holloway is head of legislation and compliance at Cintra HR and Payroll Services. He was involved in processing payrolls large and small from organisations across all sectors until 2011 when he started helping to educate the profession by developing course material, newsletters and face-to-face presentations.

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Changes to UK salary sacrifice schemes 'destroying benefits value'

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Finland proposes copying UK's controversial benefits approach