Electric Charging Points – Is there a Tax Liability?

As part of the Government’s push to encourage drivers to ‘go electric’, the Transport Secretary, Grant Shapps, announced an extension to a £50 million Government fund to install electric charge points. The fund aims to help small business to gain access to the workplace charging scheme and provide grants to meet up to 75% of the cost of installing electric charging points at domestic premises.

While tax advantages are available where employees opt for an electric company car, does a tax charge arise if an employer provides a charging point to enable employees to charge their own cars at work?

Workplace Electric Vehicle Charging

A tax exemption applies to remove the charge that might potentially arise where an individual charges the battery of a vehicle that is used by the employee.

Private Vehicles

The exemption means that an employee is able to charge their own car, or one that they are driving or a passenger in, using a workplace charging free of any associated benefit in kind tax charge. There is no requirement that the electricity provided is used for business journeys; the exemption applies regardless of whether the charge powers business or private journeys.

The exemption covers:

• the cost of the electricity;
• the cost to the employer of providing the charging facilities; and
• any connected services.

However, the exemption only applies if the following conditions are met:

• the charging facility is provided at or near the employee’s place of work;
• charging must be available to all the employees generally or those at the particular workplace should they wish to use the facilities; and
• the vehicle which is charged is one in which the employee is the driver or a passenger.

Company Vehicles

Likewise, no tax charge arises if an employee uses a workplace charger to charge an electric company car. There would, in any event, be no tax charge in respect of electricity provided for business journeys. However, as electricity is not treated as a ‘fuel’ for company car purposes, the use of a workplace charging facility does not trigger the fuel benefit charge if the charge provided powers private journeys.

Offsite Charging

The tax exemption does not apply to the reimbursement or payment of an employee’s personal expenditure in respect of charging a battery in a private vehicle away from the employer’s premises, for example, at a motorway service station. Where the vehicle is used for business journeys, mileage allowances may be paid tax-free up to the approved amount.

However, no tax charge arises in respect of the provision of electricity for a company car for private mileage as electricity is not treated as a fuel for the purposes of the fuel benefit charge.

Capital Allowances

A first-year capital allowance of 100% of the expenditure is available for expenditure on electric charge-point equipment. The allowance is available for expenditure incurred before 1 April 2023 for corporation tax purposes and before 6 April 2023 for income tax purposes.

Partner note: ITEPA 2003, s. 237A; CAA 2001, s. 45EA.