Charging Cost for Business Use?

Charging Cost for Business Use?

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khrest

Original Poster:

25 posts

53 months

Wednesday 15th February 2023
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I am testing a MY and a 3 this weekend with a view to getting one of them as my new company car, almost certainly the LR version in each case. I dont do a huge amount of business miles, but my office is a 550 mile round trip from my home and I regularly visit clients over 150 miles away. Normally I claim at the approved mileage rate and because my 330e hybrid does around 55 mpg with a light foot, I make a small profit on the claim at 0.17p per mile.

I note that the approved rate for EVs is now 0.08p per mile. I will be home charging at 0.16p per KWh so that part of the usage is all covered given I should get 3-4 miles per kwh overall. What sort of prices would I be paying at Tesla chargers because it seems that for business use, charging on the road is very costly and the 0.08p approved rate per mile is nowhere near what is needed to reclaim expenses at 60-80p per kwh as most public charges seem to be.

How do other business users cope because it appears on the surface that a very high mileage business user who goes outside the car's range frequently could end up with a personal charging bill of hundreds of pounds per month potentially? It seems a weird anomaly given the tax system for company car users has always been quite beneficial in the past (you can argue about the politics of this another time please!).

paradigital

843 posts

151 months

Wednesday 15th February 2023
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5 days ago I paid £0.45/kWh at Manchester South supercharger.

To use non-Tesla public charging costs are going to vary by charger speed and charger network. Best using something like ZapMap to get an idea of the prices you are likely to see on your planned routes.

somouk

1,425 posts

197 months

Wednesday 15th February 2023
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It will definitely be difficult to charge on the road and get it within the 8ppm electricity costs.

If you have regular routes then have a look at chargers near the hotels you use on zap map as an idea.

paradigital

843 posts

151 months

Wednesday 15th February 2023
quotequote all
It’ll be more than difficult, at 45p/kWh you’d need to average 5.6mi/kWh to get to 8p/mi.

Now clearly that figure will be skewed the right way by the outward journey from your home charging rate, but you’d still need to average slightly over 3.5mi/kWh to get your average from an equal usage of home (at 12p/kWh, Octopus Go rate) and public (at 45p/kWh) down to 8p/mile. That’s attainable, just, but any additional public charging above a 50:50 split will make it harder and harder to achieve.

With the OPs claimed 16p/kWh that gets even harder, taking the average to around 3.8mi/kWh to get down to 8p/mile with a 50:50 split of home and public charging.

And the above is assuming 100% charge efficiency, which it won’t be, you can comfortably add 10% losses to the above for proper real-world figures.

Edited by paradigital on Wednesday 15th February 17:57


Edited by paradigital on Wednesday 15th February 17:58

MaxFromage

1,861 posts

130 months

Thursday 16th February 2023
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If the trip is for business, the full charging cost can be passed on to the employer. If you're commuting, obviously this doesn't apply.

You have the choice whether to link the Tesla account to the business or not (and pay for charging), but that is separate from who should legitimately pay the costs.

khrest

Original Poster:

25 posts

53 months

Thursday 16th February 2023
quotequote all
MaxFromage said:
If the trip is for business, the full charging cost can be passed on to the employer. If you're commuting, obviously this doesn't apply.
Interesting, I've always understood (from the notes on the revenue website page) that the recommended rates were the ones to be used and if you claim a higher rate per mile, you pay tax on the difference? It's never been an issue with ICE cars because I've always beaten the cost per mile easily. This is all pure business travel; I have no regular place of work beyond my spare bedroom!

CheesecakeRunner

3,706 posts

90 months

Thursday 16th February 2023
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MaxFromage said:
If the trip is for business, the full charging cost can be passed on to the employer.
It can be from a tax perspective. But you’ll only ever get what your employer’s business expense policy pays. If I walked into my employer and presented a bill from a rapid charger, I’ll get told to bugger off and make an approved mileage claim.

My employer attempts to mitigate the cost of public rapid chargers by paying us a supplement on the mileage rate when we claim for a trip that exceeds that accepted and practical range of the car. The presumption being that you will fully charge at home for a complete charge, and this will be covered by the 8ppm rate. Then the supplement plus the 8ppm will be sufficient to cover the miles you do that need to be public charged. It’s a bit clunky and I’ve personally never bothered claiming it. I treat it as if I was running an ICE car that isn’t efficient enough to run within the approved mileage rates. I may be out of pocket a bit, but it’s pennies compared to running a comparable ICE on the same journeys.

MaxFromage

1,861 posts

130 months

Thursday 16th February 2023
quotequote all
khrest said:
Interesting, I've always understood (from the notes on the revenue website page) that the recommended rates were the ones to be used and if you claim a higher rate per mile, you pay tax on the difference? It's never been an issue with ICE cars because I've always beaten the cost per mile easily. This is all pure business travel; I have no regular place of work beyond my spare bedroom!
Yes as long as the employer has proof of the additional cost they can pay without tax consequences. It's in the HMRC guidance on advisory fuel rates.

MaxFromage

1,861 posts

130 months

Thursday 16th February 2023
quotequote all
CheesecakeRunner said:
It can be from a tax perspective. But you’ll only ever get what your employer’s business expense policy pays. If I walked into my employer and presented a bill from a rapid charger, I’ll get told to bugger off and make an approved mileage claim.

My employer attempts to mitigate the cost of public rapid chargers by paying us a supplement on the mileage rate when we claim for a trip that exceeds that accepted and practical range of the car. The presumption being that you will fully charge at home for a complete charge, and this will be covered by the 8ppm rate. Then the supplement plus the 8ppm will be sufficient to cover the miles you do that need to be public charged. It’s a bit clunky and I’ve personally never bothered claiming it. I treat it as if I was running an ICE car that isn’t efficient enough to run within the approved mileage rates. I may be out of pocket a bit, but it’s pennies compared to running a comparable ICE on the same journeys.
It'll depend on the employer of course. I work with hundreds of small/medium sized businesses as an accountant. Most of them would pay up the extra in the right circumstances, especially if they had instigated the electric cars in the first place.

MaxFromage

1,861 posts

130 months

Thursday 16th February 2023
quotequote all
CheesecakeRunner said:
My employer attempts to mitigate the cost of public rapid chargers by paying us a supplement on the mileage rate when we claim for a trip that exceeds that accepted and practical range of the car. The presumption being that you will fully charge at home for a complete charge, and this will be covered by the 8ppm rate. Then the supplement plus the 8ppm will be sufficient to cover the miles you do that need to be public charged. It’s a bit clunky and I’ve personally never bothered claiming it. I treat it as if I was running an ICE car that isn’t efficient enough to run within the approved mileage rates. I may be out of pocket a bit, but it’s pennies compared to running a comparable ICE on the same journeys.
Also I'd hope that your employer has had that signed off by HMRC otherwise your colleagues could have an issue if there was ever a PAYE inspection.

CheesecakeRunner

3,706 posts

90 months

Thursday 16th February 2023
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Yes, all above board with HMRC. Given who we are, we wouldn’t have any choice.

khrest

Original Poster:

25 posts

53 months

Thursday 16th February 2023
quotequote all
Really interesting guys, I'll be bookmarking this thread as the difference is certainly not pennies.

For example 2-3 times per year I visit our office in Scotland. That's a 550 mile round trip, in a 3LR, best case with a light foot I guess about 300 of that could be done from home charging. So that leaves 250 miles at say 0.65p per kwh at 3.8 m per kwh. I reckon that's around £42 for which I could only claim back around £5 at the approved rate.

Hopefully presentation on paper of the amount of public charging done on route would be enough to get a fuller payout without tax implications?



FWIW

3,042 posts

96 months

Thursday 16th February 2023
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With EV the employer can pay the 8ppm on ALL mileage, not just business. That’s what we do.

khrest

Original Poster:

25 posts

53 months

Thursday 16th February 2023
quotequote all
FWIW said:
With EV the employer can pay the 8ppm on ALL mileage, not just business. That’s what we do.
You seem to be suggesting that applies to personal miles as well? Doesn't that then attract the private fuel BiK?

Sheepshanks

32,530 posts

118 months

Thursday 16th February 2023
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khrest said:
You seem to be suggesting that applies to personal miles as well? Doesn't that then attract the private fuel BiK?
Nope.

Our company, with drivers with a similar use case to you, looked at EVs and for electric costs we were looking at a fuel card which sends the bill for both home and on-the-road charging direct to the company and apparently there’s no tax liability even if the charging unit cost is very high.

In the end the company decided that it might cost a fortune and so left things as they are - paying employees an allowance and mileage to run their own ICE cars.

Edited by Sheepshanks on Friday 17th February 07:51

CheesecakeRunner

3,706 posts

90 months

Friday 17th February 2023
quotequote all
khrest said:
For example 2-3 times per year I visit our office in Scotland. That's a 550 mile round trip, in a 3LR, best case with a light foot I guess about 300 of that could be done from home charging. So that leaves 250 miles at say 0.65p per kwh at 3.8 m per kwh. I reckon that's around £42 for which I could only claim back around £5 at the approved rate
Eh? 250miles x 8p per mile is £20. Ok, it’s still less than the £42 the public charging cost but it’s not a fiver. And you’d be claiming for 550 mile anyway, so your total claim would be for £44.

The other way of looking at it, is even though it’s an EV, it’s a powerful one that’s not the most efficient (yes, I know for an EV it is, but overall on a motorway, it isn’t). It’s the same as trying to run a Merc C43 on the company for the same journey and filling up at motorway service stations with the most expensive petrol. You’d only get 17p per mile for one of those, and I’d guess they’d take at least 25p probably nearer 35p per mile in fuel (going on a similar car I’ve had before).

MaxFromage

1,861 posts

130 months

Friday 17th February 2023
quotequote all
khrest said:
Really interesting guys, I'll be bookmarking this thread as the difference is certainly not pennies.

For example 2-3 times per year I visit our office in Scotland. That's a 550 mile round trip, in a 3LR, best case with a light foot I guess about 300 of that could be done from home charging. So that leaves 250 miles at say 0.65p per kwh at 3.8 m per kwh. I reckon that's around £42 for which I could only claim back around £5 at the approved rate.

Hopefully presentation on paper of the amount of public charging done on route would be enough to get a fuller payout without tax implications?
Calculations and a receipt for the charging will suffice.

MaxFromage

1,861 posts

130 months

Friday 17th February 2023
quotequote all
FWIW said:
With EV the employer can pay the 8ppm on ALL mileage, not just business. That’s what we do.
I'm a qualified accountant, and that's incorrect I'm afraid. HMRC:

When you can use the mileage rates
These rates only apply to employees using a company car.

Use the rates when you either:

reimburse employees for business travel in their company cars
need employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.

Reimburse employees for company car business travel
If the mileage rate you pay is no higher than the advisory fuel rates for the engine size and fuel type of the company car, there will be no taxable profit and no Class 1A National Insurance to pay.

If your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation.

If you pay rates that are higher than the advisory rates but cannot show the fuel cost per mile is higher, there will be no fuel benefit charge if the mileage payments are only for business travel. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.

Employees to repay the cost of fuel used for private travel
There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher), to work out how much your employees must repay you for fuel used for private travel.

You will not need to use the advisory rates where you can show that employees cover the full cost of private fuel by repaying at a lower mileage rate.

khrest

Original Poster:

25 posts

53 months

Friday 17th February 2023
quotequote all
CheesecakeRunner said:
Eh? 250miles x 8p per mile is £20. Ok, it’s still less than the £42 the public charging cost but it’s not a fiver. And you’d be claiming for 550 mile anyway, so your total claim would be for £44.

Yeah, I screwed up the calculation on that one. Probably over-analysing things!

Sheepshanks

32,530 posts

118 months

Friday 17th February 2023
quotequote all
MaxFromage said:
Employees to repay the cost of fuel used for private travel
There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher), to work out how much your employees must repay you for fuel used for private travel.
Well, there isn't a fuel benefit charge for electric cars.


The complexity of all this is one thing that put our company off. If there's no BIK charge for private use, and the firm is paying 8p for all mileage, does the private mileage 8p become taxable in full?

As said earlier, the solution we looked at was for all electric cost (inc home charging) to be billed directly to the company. The home charging cost is done by calculation and I think the amount is paid directly to the drivers electric supplier as a credit so their home bill is reduced. It's a proper scheme but there's some doubt as to whether HMRC agrees with it.