Electric vehicles reimbursement rules ‘partially’ clarified by HMRC

There has been some confusion surrounding HM Revenue and Customs (HMRC) guidelines regarding how fleets can reimburse drivers who use electric company cars.

The distinction between business and private miles is a main issue, because rules that apply to petrol and diesel company cars - advisory fuel rates (AFRs) - do not apply to electric fleet vehicles (EVs).

Not a fuel

This is because electricity is not considered to be a fuel, and without a reliable fuel cost figure a whole life cost for fleet EVs is difficult, if not impossible, to calculate.

Employees who recharge their cars at work face further uncertainty in regards to the tax implications. The overall effect is that many big operators are holding back on using EVs for company fleets.

HMRC has now moved to clarify the issues by addressing fleet managers at the ACFO Autumn Conference.

Actual costs

HMRC's Elizabeth Ward-Lewis said: “Electric cars don’t have any AFR rates, so that means you should be using the actual costs of charging vehicles.”

Ward-Lewis explained: “Electric cars owned by an employee can claim AMAPs [Approved Mileage Allowance Payments] and it’s the same rate as petrol or diesel [45 pence per mile],” and pointed out that privately owned EVs used for business trips can garner a benefit.

However, an employee who charges his or her private EV at work would face a 'benefit in kind' tax on the cost of the electricity that is used.