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Workplace charging facilities exemption

London roads
The publication of the draft Finance Bill No. 3 on 07 November 2018 has confirmed an exemption for workplace charging of electric and plug-in hybrid vehicles from 6 April 2018.

The exemption stipulates that where an individual is provided with workplace charging facilities for a vehicle used by them, even as a passenger, no taxable benefit arises, so long as certain conditions are met. The new rules bring employee-owned vehicle workplace charging facilities into line with the exemption already applicable to the provision of electricity and connected services by an employer for company cars and/or vans under Section 239 ITEPA 2003.

Prior to 06 April 2018, if an employee charged their vehicle at their workplace a taxable benefit in kind would arise based on the cost of electricity to the employer. Going forward the updated rules eliminate this taxable benefit under the proposed Section 237A ITEPA 2003 as the exemption specifically covers the cost of electricity, the cost to the employer of providing the charging facilities, and any connected services. This is a welcome measure as an increasing number of employers are providing workplace charging facilities to their employees, but under the exemption, employers are no longer required to report the value of the electricity provided for the workplace charging of an employee’s vehicle from 06 April 2018.

However, the onus is on the employer to ensure that all of the following qualifying conditions are satisfied in order for the workplace charging facilities exemption to apply:

  1. charging facilities are provided at or near an employee’s workplace and cannot include an individual’s home
  2. charging must be available to all employees generally (or all employees generally at a particular workplace location)
  3. charging facilities are not offered in conjunction with an optional remuneration arrangement
  4. charging facilities are for the battery of a vehicle in which the employee is either a driver or passenger

If you are already providing, or thinking of providing, workplace charging facilities this is undoubtedly good news, given that no records of the amount of electricity used by each employee are required and tax should not be due on the provision of the charging facilities (providing the necessary conditions are met).

The draft HMRC guidance still subject to the Finance Bill being approved by Parliament and receiving Royal Assent.

If you have any questions or would like our assistance in this or any other employment tax area, please do not hesitate to contact us.

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Caroline Harwood
Caroline Harwood
Partner, Head of Share Plans and Employment Tax