The government is sending out mixed tax messages about electric vehicles. This is what you need to know as an employer.
An employee provided with an electric company car (zero CO2 emissions) is taxed on 13% of its list price in 2018-19 and 16% of list price in 2019-20. But from April 2020, the taxable benefit will reduce to just 2% of the vehicle’s list price. So if you want to provide electric cars to your employees, wait until 2020.
The taxable benefit for using an electric van for private journeys is £1,340 per year, which is still a bargain compared to the benefit for an electric company car. However, all company vans will attract the same tax charge from April 2021.
If you permit employees to charge their company-provided electric vehicles at work for no payment, the drivers are not taxed on that free ‘fuel’, because electricity is not defined as fuel for the car benefit regulations.
But if your employees charge their own electric vehicles at work, the cost of the free electricity used is theoretically a taxable benefit. This anomaly should be removed retrospectively from April 2018, so that charging an electric vehicle at work does not create a taxable benefit for any employee.
If your business installs charging points for electric vehicles between 23 November 2016 and 31 March 2019, it can claim a 100% capital allowance for those costs.
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