The Institute of Chartered Accountants in England and Wales (ICAEW) Tax Faculty has highlighted that HMRC’s guidance on reimbursement of electricity costs for charging company-provided wholly electric cars conflicts with the law.
HMRCs uses an online tool and guidance that both say reimbursements to employees by employers for the cost of electricity used to charge their company-owned vehicles that are wholly electric cars and are available for private use are subject to income tax and National Insurance.
The UCAEW Tax Faculty studied legislation including the Income Tax (Earnings and Pensions) Act 2003 and have interpreted that the cost of charging a company-owned, wholly electric car are included in the car benefit charge. It continued that they recommended the reimbursements claimed by employees are calculated using accurate readings of the amount of electricity used to recharge the car and failure to do so results in the reimbursement being treated as funding part of the employee’s domestic energy bill which makes the reimbursement liable to income tax and National Insurance.
A spokesperson for HMRC said: “This matter has been raised recently with us and we are considering the relevant legislation in detail. We will continue to work closely with ICAEW, sharing views on this in due course. Employers should continue to follow HMRC guidance.”