16 November 2023

HM Revenue and Customs (HMRC) has published amended guidance in the Employment Income Manual (EIM23900) and introduced new guidance in the National Insurance Manual (NIM06440) about a change in home charging of electric vehicles.

Section 239 of the Income Tax (Earning and Pensions) Act 2003 (ITEPA 2003) provides an exemption on payments and benefits provided in connection with company cars and vans. This legislative provision therefore exempts aspects such as vehicle repairs, insurance and vehicle excise duty.

HMRC previously stated that the reimbursement of costs in relation to charging a company car or van at a residential property was not caught by this exemption, and in turn, resulted in a benefit in kind (BiK). However, following a review, HMRC now accepts reimbursing part of a domestic energy bill, which is used to charge a company car or van, will fall within the exemption provided by section 239 of the ITEPA 2003.

This means that no BiK will arise where an employer reimburses the employee for the cost of electricity to charge their company car or van at home. 

The exemption will only apply if it can be demonstrated that the electricity was used to charge the company car or van. Employers will need to make sure that any reimbursement made towards the cost of electricity relates solely to the charging of the employees company car or van.

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