“I’m thinking of ordering an electric car” said Derek, a client, during a coffee meeting last week. “Can my business pay for my electric car charging point at home?”
Electric vehicles are becoming increasingly popular in the UK, with 17% of all new cars sold in 2022 being electric. As the owner of an established business, you’re looking to follow this trend by going green when it comes to bringing new vehicles into your company. Whether they’re for you or your employees, you’re considering the benefits of at-home charging points.
Electric vehicles aren’t just great for the environment; they can also provide tax concessions to businesses. Companies who pay to install electric car charging points at their employees’ homes can benefit from these.
Can my business pay for my electric car charging point at home? There are different rules according to who owns the car.
If your company owns (or leases) the electric vehicle:
If your company provides an employee with a company car (leased or purchased), the business can pay for the installation of a home charging point without any Benefit in Kind (BiK) charge arising. This means the employee won’t have to pay any tax for having a charger installed.
If the employee owns (or leases) the electric vehicle:
The rules are a bit different here. If your employee owns or leases their personal car which they also use for business purposes, they will be subject to a BiK charge on the cost of the installation of the charging point at their property. In both scenarios, your business won’t have to pay tax on the charging point installation.
Let’s look at it in context…
If the charger costs £500 to install and your employee is a 40% taxpayer, they will have to pay £200 income tax. This is assessed by your company submitting details of the BiK on a P11d form to HMRC.
The rules change depending on when the vehicle was purchased.
If the car charger was purchased between 1st April 2021 and 31st March 2023, your business can claim capital allowances of 130% of the installation cost (also known as the Super Deduction). This enhanced tax allowance was unfortunately withdrawn on 31st March 2023. It means any new electric charging points you install won’t benefit from the Super Deduction. But, the government have announced that they are extending the availability of the 100% first-year allowance (FYA) for qualifying expenditure on plant and machinery (equipment) for electric vehicle charge-points by two years – to 31 March 2025 for Corporation Tax purposes, and to 5 April 2025 for Income Tax purposes
Understand which rules affect you.
As you can see, the rules are quite tricky. They have a tendency to change and be impacted by different variables, so you’ll need to keep an eye on the HMRC Employment Income Manual for updates.
Sounds complicated? We’re here to help. Fill in our qualifying form and let’s see how we can help you understand what the rules mean for your business.
