Charging Cost for Business Use?

Charging Cost for Business Use?

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Discussion

MaxFromage

1,886 posts

131 months

Friday 17th February 2023
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Sheepshanks said:
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.
Correct, there is no BIK, but that has nothing to do with being paid for fuel. They are completely separate matter and why people get confused over electric car charging, home or away, benefits, income or not. That's before you get to VAT...

Here's a link to your questions, and also why it's far too complicated currently:

https://www.gov.uk/hmrc-internal-manuals/employmen...

Sheepshanks

32,750 posts

119 months

Friday 17th February 2023
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MaxFromage said:
Correct, there is no BIK, but that has nothing to do with being paid for fuel. They are completely separate matter and why people get confused over electric car charging, home or away, benefits, income or not. That's before you get to VAT...
It doesn't help (and I did this too) that the terms "fuel benefit charge" and "BIK" are being used as if they're the same thing.

There's no fuel benefit charge for EVs.

FWIW

3,069 posts

97 months

Sunday 19th February 2023
quotequote all
MaxFromage said:
Sheepshanks said:
It doesn't help (and I did this too) that the terms "fuel benefit charge" and "BIK" are being used as if they're the same thing.

There's no fuel benefit charge for EVs.
Well in this context they are...
With respect to the qualified accountant and unless I’m misunderstanding you, I think you’re wrong. More accurately, my qualified accountant thinks you’re wrong.
As Sheep says, there’s no FBC for EVs therefore, what I originally said is correct; an employee with a company EV can be paid for all mileage, without tax implications. At 8ppm.
Alternatively, they can be paid for public charging costs on business travel.
Happy to be corrected.

Sheepshanks

32,750 posts

119 months

Sunday 19th February 2023
quotequote all
FWIW said:
With respect to the qualified accountant and unless I’m misunderstanding you, I think you’re wrong. More accurately, my qualified accountant thinks you’re wrong.
As Sheep says, there’s no FBC for EVs therefore, what I originally said is correct; an employee with a company EV can be paid for all mileage, without tax implications. At 8ppm.
Alternatively, they can be paid for public charging costs on business travel.
Happy to be corrected.
Well, it complicated and unclear, but mileage reimbursement is supposed to be for business travel. Therefore payment for personal miles is a BIK - it’s just extra pay.

What’s ridiculous about it is your alternative - employer pays for everything with no tax liability for the employee - is correct, assuming public or workplace charging is used. Charging at home gets messy again.

MaxFromage

1,886 posts

131 months

Sunday 19th February 2023
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I've tidied up my replies to make the thread more useful. A fuel benefit charge is a BIK, which is what I was replying to, but then realised there is also a question over whether paying for private motoring is a BIK.

Sheepshanks said:
Well, it complicated and unclear, but mileage reimbursement is supposed to be for business travel. Therefore payment for personal miles is a BIK - it’s just extra pay.
Yes I'm afraid FWIW is incorrect. Flowcharts are provided by HMRC and are here:

https://www.gov.uk/hmrc-internal-manuals/employmen...

Edited by MaxFromage on Sunday 19th February 18:15


Edited by MaxFromage on Sunday 19th February 18:15

oop north

1,595 posts

128 months

Sunday 19th February 2023
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Just to add to the fun, I am also a qualified accountant! Not a tax specialist but my tax lecturers say that the hmrc guidance is wrong - as electricity is specifically not a fuel per the legislation. Hopefully the tax bodies will be able to get hmrc to agree, maybe via a tax tribunal

But different accountants have very different views

Charging your personal ev at work is not taxable, Co company ev def not taxable for charging at work - whether or not that includes private mileage

Some say that reimbursing personal charging (whether at home or on public charger) makes it taxable - just like it does for mobile phone and internet. But others disagree.

Getting employee to pay direct is agreed by some to be ok

MaxFromage

1,886 posts

131 months

Sunday 19th February 2023
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Tax lecturers don't get sued if they get it wrong biggrin

Either way EIM23900 is clear for now that HMRC view businesses paying for personal charging via a pence per mile method is taxable. I can't see it changing in the taxpayers favour either to be honest.

paradigital

863 posts

152 months

Tuesday 21st February 2023
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The flow chart is really interesting on the private car half, I spent a year charging my then PHEV at a previous employer, and paid nothing. According to the flow chart I should have been paying BIK on the total cost of the electricity.

Plot twist: The chargers were connected to a large PV array, so most of the time the electricity was “free”. How would that work?

FWIW

3,069 posts

97 months

Tuesday 21st February 2023
quotequote all
MaxFromage said:
I've tidied up my replies to make the thread more useful. A fuel benefit charge is a BIK, which is what I was replying to, but then realised there is also a question over whether paying for private motoring is a BIK.

Sheepshanks said:
Well, it complicated and unclear, but mileage reimbursement is supposed to be for business travel. Therefore payment for personal miles is a BIK - it’s just extra pay.
Yes I'm afraid FWIW is incorrect. Flowcharts are provided by HMRC and are here:

https://www.gov.uk/hmrc-internal-manuals/employmen...

Edited by MaxFromage on Sunday 19th February 18:15


Edited by MaxFromage on Sunday 19th February 18:15
Very useful link (if still confusing!), thanks. I’ll be seeking further guidance from my accountant!

Can you explain the difference between these 2 scenarios assuming mixed use of company car?:



MaxFromage

1,886 posts

131 months

Tuesday 21st February 2023
quotequote all
paradigital said:
The flow chart is really interesting on the private car half, I spent a year charging my then PHEV at a previous employer, and paid nothing. According to the flow chart I should have been paying BIK on the total cost of the electricity.

Plot twist: The chargers were connected to a large PV array, so most of the time the electricity was “free”. How would that work?
Did you read EIM1035? It may be your charging was not a BIK.

In terms of the PV aspect, it's an interesting twist and one I encounter during summer months. Ignoring EIM1035, if the employer doesn't receive export payments, then it is truly free. No BIK? If they do, then the BIK would be at the export rate. HMRC would expect a 'fair' calculation to be performed. I had to consider this from a VAT perspective. The rules are a complete mess ATM.


MaxFromage

1,886 posts

131 months

Tuesday 21st February 2023
quotequote all
FWIW said:
Very useful link (if still confusing!), thanks. I’ll be seeking further guidance from my accountant!

Can you explain the difference between these 2 scenarios assuming mixed use of company car?:


The first scenario is where the company directly contracts with the electricity provider (unusual) and the second is where the cost is reimbursed. Throughout tax legislation, there is often a marked difference between costs directly contracted vs reimbursed.

So in the second example electricity costs can be paid to an employee, so they are classed as income and then a deduction is made for the actual business use. This could be using HMRC approved rates or your own calculations with evidence.

But in reality it wouldn't make sense to do this and so as noted previously, the employer should just pay the calculated rate (if more than approved) for the business miles travelled. Therefore there is no element of income, only reimbursement.

khrest

Original Poster:

25 posts

54 months

Tuesday 21st February 2023
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OP here, enjoying the discussion in here about what a mess the HMRC rules are; our company actually seems to have no standard method but I am told if I submit evidence of public charging for business use they will pay me that as a monetary amount whilst home charging would be at the 8p recommended rate measured by the mile!

Anyway, we ordered a Model 3 LR in blue today so it was worth asking the question after all!

FWIW

3,069 posts

97 months

Tuesday 21st February 2023
quotequote all
MaxFromage said:
The first scenario is where the company directly contracts with the electricity provider (unusual) and the second is where the cost is reimbursed. Throughout tax legislation, there is often a marked difference between costs directly contracted vs reimbursed.

So in the second example electricity costs can be paid to an employee, so they are classed as income and then a deduction is made for the actual business use. This could be using HMRC approved rates or your own calculations with evidence.

But in reality it wouldn't make sense to do this and so as noted previously, the employer should just pay the calculated rate (if more than approved) for the business miles travelled. Therefore there is no element of income, only reimbursement.
Thanks. What a mucker’s fuddle!