HMG and EV Income Tax Benefit in Kind

[Dustydog]

If my ICE was still a Co Car my benefit in kind taxation will be 37%.

Son tells me the Volvo Recharge is next to nothing 2% ish. So I’m closely following his financial impact of an EV as well as the practical.

Looking at HMG site the following is worth pasting for interest.

As more employers switch their fleets to electric vehicles, it’s worth knowing there are various other tax perks.

Firstly, there is no taxable benefit if the employer allows employees to charge their cars from a vehicle point at work.

Secondly, there’s no taxable benefit if an employer pays for a charging point to be installed at an employee’s home.

Thirdly, if an employer pays for charge cards for use at public charging points, these don’t count as a taxable benefit either.

So he charges at home every night and claims tax relief on the charging cost . Ok . But where at the moment , it's not clear , is how HMG differentiate private from business mileage. Many of you will remember the monthly mileage form we all filled in.
We will see. Anyone else know?

The problem I see on the horizon in a week or so will be the decline in ICE road fund licence income. Surely it has to be replaced somehow?Or will our roads become one big pothole😜

 

[RogerL]

For cars first registered from April 2025, EVs will be "taxed" the same as IC cars - so £10 in year 1 and then £190/year thereafter - note the over £40,000 surcharge of £410/year will also apply to those newly registered EVs.

2025 electric car tax explained - how much will I need to pay?

Electric car tax - also known as VED - will be charged on all EVs in the UK from April 2025. Parkers explains everything you need to know in this guide.

www.parkers.co.uk

 

[Buckman]

Looking at HMG site the following is worth pasting for interest.
The problem I see on the horizon in a week or so will be the decline in ICE road fund licence income. Surely it has to be replaced somehow?Or will our roads become one big pothole😜

That is what I have been saying for sometime.

 

[Jcloughie]

Any talk of company car tax relief is foreign to me. Never had to get involved. Any work travel was just paid at a milage rate, 45p/mile if I remember. We tried to negotiate a rise but the finance director convinced us that we would be worse off due to the tax rules.

I even bought my own cars!

We had pool cars in a previous job. We occasionally got pulled up by the police for no road tax. Explaining that Government vehicles are exempt was sometimes difficult.

My daughter is on top of such things, they have their own business and run a car and van, often updated. They have income and expenses channeled through different accounts, eg, American Express, to gain maximum Avios points. This enables a hell of lot of first class travel.

I am happy to remain ignorant on such things.


John

 

[Tobes]

If my ICE was still a Co Car my benefit in kind taxation will be 37%.

Son tells me the Volvo Recharge is next to nothing 2% ish. So I’m closely following his financial impact of an EV as well as the practical.

All true. The tax rate is fixed to April 2025 and then escalating 1% per year to 5% in 2028. Still good value.

Looking at HMG site the following is worth pasting for interest.

As more employers switch their fleets to electric vehicles, it’s worth knowing there are various other tax perks.

Firstly, there is no taxable benefit if the employer allows employees to charge their cars from a vehicle point at work.

Correct. Some employers do this for free, some for a reduced cost, there is no BIK.

Secondly, there’s no taxable benefit if an employer pays for a charging point to be installed at an employee’s home.

Also correct.

Thirdly, if an employer pays for charge cards for use at public charging points, these don’t count as a taxable benefit either.

This only applies to company cars, not to personal cars, but it's not just for charge cards. Any public charging the the company chooses to pay for on behalf of the employee is not subject to BIK.

If the car is a personal EV, charging that is payed for by the company is subject to BIK at marginal rate. (This is the same as it was for a personal ICE vehicle). For any business miles driven on that charging, tax relief on the BIK can be claimed at 45p per mile for the first 10k business miles.

So he charges at home every night and claims tax relief on the charging cost . Ok . But where at the moment , it's not clear , is how HMG differentiate private from business mileage. Many of you will remember the monthly mileage form we all filled in.
We will see. Anyone else know?

If it's a company car, HMRC are not interested in the difference between private and business miles. The company may be, but that is a different story.

The problem I see on the horizon in a week or so will be the decline in ICE road fund licence income. Surely it has to be replaced somehow?Or will our roads become one big pothole😜

Road fund licence is not a thing. Vehicle excise duty (VED) (what people tend to call road fund licence) is being retroactivly re-instated for EVs registered after March 2017 at the standard rate of 190 per year from 2025.

I.e. from 2025, all cars that are older than 2017 pay the same rate of VED in year 2 onwards. Year 1 price is governed by CO2 emissions. The Luxury car tax will also be common to EVs registered after March 2025.

But this is a relatively small additional cost. The real issue is how the government will fill in the gap created by lack of fuel duty and the VAT on that duty.

 

[Dustydog]

If it's a company car, HMRC are not interested in the difference between private and business miles. The company may be, but that is a different story.

How times change.
Back in the day nearly all of us gave up,the free fuel card which covered private use. The tax was exorbitant. You needed to do 12k private miles a year just to break even!

 

[Tobes]

How times change.
Back in the day nearly all of us gave up,the free fuel card which covered private use. The tax was exorbitant. You needed to do 12k private miles a year just to break even!

Yep - that's part of why I gave up a company car in 2006. To be clear, that charge is still in place today for "fuel" (petrol, diesel, LPG). Electricity is not a fuel in the eyes of HMRC for company or personal cars. That means if you have a generous employer, an EV is even more beneficial than an ICE as a company car for private miles. To be clear, the EV charging costs, cost my employer about £240 a year. With my PHEV, I had the benefit of private fuel payments too, and it cost them more like £1000 for less mileage, and cost me £400 in BIK.

 

[GaryB]

I also got off the company car bandwagon back in 2019 and never looked back, officially home based so charge 45ppm and get a decent car allowance in my salary. Company cars aren’t the perk they once were…..

 

[RogerL]

I also got off the company car bandwagon back in 2019 and never looked back, officially home based so charge 45ppm and get a decent car allowance in my salary. Company cars aren’t the perk they once were…..

I recall that a fully-expensed company car was only lightly taxed in the '80s - although a jealous fellow employee did suggest that the company shouldn't pay for my fuel towing down to Cornwall and up to Scotland - fortunately not followed up by the directors.

Despite driving like a hooligan I was able to get similar fuel consumption as the other managers with similar cars - and I suspect we were all fuelling our wives' cars at the company expense!

 

[Tobes]

I also got off the company car bandwagon back in 2019 and never looked back, officially home based so charge 45ppm and get a decent car allowance in my salary. Company cars aren’t the perk they once were…..

It's true they were not for 15 years. Then in 2018, if your company let you have an EV, they became a bargain again. 2018 to 2021 company car tax on an EV was 0% and 1% in 2021 to 2022. It's currently 2%.
My brand new car (in 2021) is costing me the equivalent of a coffee a week over the 4 years compared to the car I owned and was running before - and that was before the government rethought BIK on home charging (so it got cheaper). Of course, I will need to rework the calculations in 2025 when I have to return it and choose a new path, but given whatever I have will be another EV (there is no way I am going back to ICE) it will probably still be the lowest cost way for me to have one.