Can I Claim For Charging My Electric Company Car at Home?

Electric company cars are on the rise

As the UK moves to a green transport future, spurred by the planned ban of new diesel and petrol car sales in 2035, many businesses are replacing their internal combustion engine (ICE) fleets with battery electric cars and vans. With this move, you might be wondering if you can claim the expense of charging an electric vehicle (EV) at home, just as you would refuelling a company car at a petrol station.

The transition to electric company cars in the UK

In recent years, the UK has seen a notable increase in electric vehicles as company cars. In Q1 of 2024 alone, 44% of new business contract hires were electric vehicles. This transition is encouraged by a number of incentives aimed at reducing carbon emissions and promoting greener travel.

Employees enjoy lower Benefit in Kind (BiK) tax rates on electric company cars than petrol or diesel ones. The rate is currently frozen at 2% until April 2025, after which it will increase by 1 percentage point every year until 2028. The government also offers grants to eligible drivers, cutting the cost of buying and installing an EV home charger like the Solo 3 by up to £350.

Policies on claiming charging expenses

Not too long ago, reimbursements for charging an electric company car at home were seen as taxable earnings by HMRC and treated as such. Luckily, a recent review of the rules has changed this and reimbursements for home charging of company EVs are now exempt in the Income Tax (Earnings and Pensions) Act 2003, making them tax-free.

HMRC provides an advisory rate of 9p per mile. Alternatively, employers can make other arrangements to reimburse employees for charging. Your employer can agree to include a monthly charging allowance in your pay, reimburse per kWh used at home for charging, or provide you with a dedicated company debit or credit card for public charging.

Drivers must provide VAT receipts for reimbursements. Obtaining a VAT invoice for public charging can be tricky, making home charging even more attractive. Modern home chargers can track and show exactly how much electricity was used to charge an EV, which will help you when claiming charging expenses.

Private vs business use

The tax-free status only applies to miles covered for business purposes. The HMRC makes it clear that commuting to your workplace from your home or any other place that isn’t your home, like a friend’s house, counts as private use.

Here are two examples to demonstrate different types of use:

• Private use – You travel to the office with your electric company car Monday to Friday, or you use your car to go grocery shopping after work. Your employer can reimburse the mileage for this journey if they offer it, but you will have to pay taxes on the reimbursement.

• Business use – You travel to a client’s site while at work or use the electric company car to run errands for your job. Your mileage reimbursement for these trips is tax-free, meaning you keep 100% of the money.

Find more information on taxation of commuting and private travel on the HMRC site.

How to claim charging expenses in the UK

1. Check employer’s guidelines – Familiarise yourself with the process. Your employer will set out clear requirements for claiming expenses to ensure compliance with HMRC.

2. Keep a record – Maintain a detailed log of your business mileage to avoid confusing personal and business use. This is important to back your claim.

3. Calculate electricity costs – Use the advisory rate provided by HMRC or the rate agreed with your employer. Here, you either have to estimate using your overall kWh usage or check your charging app for exact numbers.

4. Submit your claim – Provide your employer with the documentation, including your mileage log and charging cost calculation. Your employer will typically reimburse you through payroll.