The BiK Implications of Charging EVs

2018 Update: No benefit in kind on electricity at work since 6th April 2018

As an employer, if you provide company cars or fuel for your employees’ private use, you’ll need to work out the taxable value so you can report this to HM Revenue and Customs (HMRC). When it comes to electric vehicles however, there is no fuel benefit, as electricity is not classified as a fuel.

Taxable benefits do apply in more general terms relating to workplace electricity and any home chargers provided by an employer.

• If an employer provides electricity to an employee to charge their own car, a benefit in kind arises representing the cost of the electricity used for private mileage, which must be reported to HMRC
• The provision by an employer of a chargepoint for an employee at their home also gives rise to a benefit in kind
• The government recognises that this is a developing area and keeps the tax rules under review at fiscal events to ensure that they remain effective in promoting take up of cleaner cars but are also consistent with the government’s wider fiscal objectives

Currently there is no clear guidance on how to calculate the cost of electricity. However, there is an exemption for ‘trivial benefits’, HMRC’s guidance EIM21864.

One of the conditions that has to be satisfied is that the cost of providing the benefit does not exceed £50. If the cost of providing the benefit exceeds £50, the full amount is taxable, not just the excess over £50.

Working out the cost of workplace electricity provided

Unless the charging unit can identify the vehicle and cost of electricity provided, it will be necessary to estimate the cost. In the following two scenarios we have calculated the cost of an average charge x number of times used per year.

This is based on the assumption that:

• • a hybrid driver would need to charge at least 3 times a week for every week at work
  • a full EV driver would need to put in at least 40 miles of charge twice a week, every week

Note: this publication has been prepared only as a guide. Clearly this is an area of legislation which will evolve each tax year. No responsibility can be accepted by Fleetdrive Management Ltd for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.

Full and up to date information can be found on the OLEV factsheet Tax benefits for Ultra Low Emission Vehicles and at HMRC’s website https://www.gov.uk search for ‘eim21865’