01 September 2021
Tax Implications of Providing Electric Charging Points
Services:
Corporate Tax Planning
Tax Implications of Providing Electric Charging Points
With the publication of the most recent IPCC report, COP26 in November and the governments’ continual interest in climate change and reducing CO2 emissions by way of tax reliefs for low emission assets, it is no wonder that the popularity of electric vehicles is on the rise.
As a consequence, there is an increased requirement for electric charging points. You may be considering introduced one in your workplace, and it is therefore important to consider the tax consequences of this, outlined below:
Corporation Tax
A company investing in qualifying infrastructure such as charging points, are able to claim 100% relief on the costs in the year they are incurred under the ‘first year allowances’ rules. Alternatively, it will qualify for the new super-deduction of 130% announcing in the Summer 2021 Budget, which will be beneficial assuming there is no intention to sell the asset for a profit in the near future.
Value Added Tax
The VAT incurred on the charging points is recoverable in the normal way assuming the purchase is for business use for example, in the business premises car park. Input VAT can also be reclaimed on the supply of electricity at the business premises, although this should be apportioned for any private use arising.
If the charging point is provided at an employee’s home, the VAT is not recoverable. In this circumstance, it may be worth looking into the ‘Workplace Charging Scheme’ and the ‘Electrical Vehicle Homecharge Scheme’.
Income Tax
Where employees receive a benefit from the company as part of their employment, a charge to income tax may apply. This is no different where electricity is supplied to charge electric vehicles.
The correct treatment depends on whether the vehicle being charged is an employee’s personal car being used for business or a car provided by the company or both business and private use. The below table explained the difference in tax treatment:
Charging electric cars: benefits in kind consequences
| Provision | Company car with private use | Employee’s car used for business |
| Employer allows car to be recharged at a work charging point | No taxable benefit | Generally no taxable benefit (conditions apply) |
| Employer pays for a vehicle charging point to be installed at an employees home | No taxable benefit | Taxable benefit based on the cost to employer |
| Employer pays for a charge card to allow the employee to charge the car at third party charging points an unlimited amount | No taxable benefit | Taxable benefit based on the cost to employer |
Where a benefit arises based on the above, this should be reported via a form P11D annually.
Haines Watts
Our tax team is here to help. If you are considering investing in an electric charging point, have an electric car or provide electric cars for employees or would like any more information on the above, please get in touch.
Author
Matthew Neale
Regional Managing Director
