Although HMRC give some fairly comprehensive guidance on this topic none of the examples, per usual, cover my particular scenario. Company provides employee with electric car (mixed use). There are charging points at work, which is all well and good, but sometimes the employee needs to pay for charging at remoter locations, using the company credit card for payment. The closest scenario that HMRC discuss is employee charging at home and employer providing the electricity (no BIK etc). In this case, the charging is not at home but the real question is whether use of the company credit card amounts to the employer "providing" the electricity. Question is a short one - is there a charge (no pun intended) to income tax/NI?
All contributions welcome.
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In the good old days HMRC considered use of company card needed to be declared before filling up. If not a fictional NI charge due.
What a load of HMRC invented tosh
I only have one and will not be declaring BIK on electric tops-up until I see a tribunal decision on such
Jaysus ! Do I not need to do that any more ??
Fictional tax/NI?
Like in Peter Carey's The Tax Inspector?
Anyway I love a belligerent answer. "Never mind the law" [you'd probably say that in fewer words, one of them ending in k], "I ain't paying it unless Phil Mitchell* tells me to!" Wilson was, I suspect, after a bit more of a technical justification.
*Sticking with the theme of fiction.
Old days
If you filled the company car but did not declare use of card to cashier BEFORE filling then in addition to BIK on fuel there was a separate NIC due, on top of all other BIK, being use of co card for 'personal liability'
Tax irrelevant just full ERNIC and EENIC
For some stupid reason HMRC seemed only interested in company cars
The logic would still apply to all the truck drivers that paid with fuel card.
Wait, so using the company card to pay a personal liability (the employee having bought her/himself some fuel) still counts as the company providing the fuel? In that case, you can use HMRC's old days argument against them and say that in Wilson's scenario the company is providing the lectric juice (even if the employee forgets to pre-declare the company card).
That's if you've stated it correctly.
I never fully understood HMRC’s position, taxing such payments as a fuel BIK, but NI’ing as earnings (being settlement of pecuniary liability). If I were to fill up my company car and pay for it personally, and ask for full reimbursement by my employer I would expect that reimbursement to be taxed and NI’d simply as additional earnings. End of. I don’t see why ‘incorrect’ use of the employer’s card should be treated any differently - it’s either provision of fuel by employer (BIK and Class 1A) or additional earnings, not both.
Is that really what they say/said??!
"HMRC invented tosh" sounds about right! You've converted me, Paul. (With some help from Wilson.)
Yes it's correct, HMRC used to spout that stuff from some ivory tower somewhere.
And considering that a petrol station cashier isn't the highest paid position and / or the position is often filled by a worker who doesn't have English as a first language HMRC's position was utterly preposterous in the real world.
It's worth doing at least once - just to see the cashier's furrowed brow.
"Dear cashier, I am acting as agent for Lionofludesch Ltd ('The Company') in the transaction I am intending to perform (fuelling that car there). The car belongs to The Company. This is a card in the name of The Company. Were I to drive off without The Company paying, which payment will have to be on this card, it is The Company, not me, that your employer would have to sue. Do you (as agent for your employer) consent to these terms, before I fill up?"
"Dear non-customer, no. If The Company (as defined by you) wishes its car to be fuelled, you must yourself purchase the fuel. I will then be able to address you as 'Dear Customer'. Liability for non-payment by The Company must fall on you, not on my employer. My employer reserves the right to sue you, notwithstanding that that is not your vehicle. You may of course use that card, in the name of The Company, to settle your liability. That is between you and The Company."
You must have had hours of fun.
I'm confused. (Again! :-))
If I use a company card (without pre-declaration) to buy my shopping, the payment will be treated (tax and NI) as basic earnings. (Unless my Aweb-educated accountant later stuck it to DLA without telling me, but let's momentarily park that.)
Wilson said (perhaps I misunderstood) that, if my shopping included fuel [for the company car], that bit would be hoicked out (for tax only - NIC not), as this would be seen* as the company providing me with fuel. So I'd get a whopping BIK hit I wasn't expecting. (But, having been NI'd as earnings, there's no class 1A.)
I get that pre-declaring/not pre-declaring is a farce, but I can see logic there - no pre-declaration, contract is with me, pre-declaration, contract is with the company. Real world, forget it.
I don't see logic in the HMRC position as Wilson reported it - the bit marked *.
But if that was/is HMRC's position, Wilson (all of us) can use that argument back at them re e-cars.
The tax on Fuel against personal liability would cancel out
The NI bit did not
Well, no - fuel BIK is likely way more. Especially this year!
I'd say no on the grounds that electricity does not come under the definition of fuel for this purpose.
Edit - and that the supply is to the company being the owner of the car.
shocking answer, I'm going ohm in my Voltswagon
Getid...'Volts' wagon!
I wonder Watts on tv tonight.......
thats a shocker
Planet Earth. I watched it at ohm,
.... sorry, repetition of ohm. Then I watched Joules Holland.
I think we current-ly have amp-ple puns on this this topic now!
OK, so HMRC's for example of the employer providing the electricity at the employee's home envisages a scenario in which the employer installs a vehicle charging point at the employee's home. (As if that's going to happen!)
Their other scenario is one in which the employee uses his own electricity to charge the car from home, and is reimbursed by the employer. The reimbursement is taxable as earnings; mitigated by a proportionate deduction for the cost of business miles.
So, if you'll excuse my tin-pot approach, we're interested in the second scenario. Albeit let's establish the same tax treatment applies for the employee that uses his own electricity that he contracts for and draws from a third party's charging point.
For that, a quick trip to HMRC's "Check if you need to pay tax for charging an employee’s electric car " https://www.gov.uk/expenses-and-benefits-electric-company-cars
Q1 The employer owns the car and Q3 Mixed business and personal use are givens. So let's test drive Q2 "Who pays to charge the car?":
Possible answers:
(a) the employer (non taxable / no NI);
(b) the employee (non-taxable, employee claims for business mileage);
(c) the employee, reimbursed by the employer (taxable as "earnings", pay tax / NI; employee claims cost of business proportion of use).
So it's (a) or (c), as per your question. And, if it is (c), then HMRC's tool, above, confirms that there's essentially no difference between an employee using his own electric supply or that of a third party. And, for good measure, whatever the taxable reimbursed expense, it can be reduced by the business miles element.
So, as others have covered, it's down to a contractual matter, as to the identities of the parties. For my money, that's got little to do with who actually pays (the company card v. the employee's personal card) but more importantly just who the attendant thought they (as their employer's agent) would be contracting with. Plain sailing in a petrol station, as the contract is performed as and when the fuel is drawn; so that any notice to the garage that they will be contracting not with the driver but with the employer must be given ahead of drawing the fuel. Otherwise the attendant is entitled to assume the contract is with the driver (together with its attendant bilking possibility, along the lines already outlined by Tax Dragon).
I know very little about third-party electric charging points, but I'll bet you a jam doughnut you have to pay up front (or at the very least pre-register your card). And that's where I see the contractual difference - the third party charging points establish up front just who the contracting parties are. So, having accepted the employer's card, the third party charging company is clearly contracting with the employer. In HMRC's perhaps over-simplistic parlance, the employer is paying. Different of course if the employee uses his own personal card.
And if I'm wrong, that is to say if it is the case that payment is made after the electric tank has been filled, then I suppose there's a secondary argument the same as that of any petrol filling station that the employee so-informed the attendant beforehand that his employer, not he, would be the contracting party. I'm not sure you'd need a tertiary argument for unmanned charging points - surely you pre-pay for those!?
Arthur's comment about electricity not being a road fuel: See 6.4 of https://assets.publishing.service.gov.uk/government/uploads/system/uploa... so no
benefit in kind for "electric fuel". But you knew that already - I'm tellin' my granny how to suck eggs again.
Charging stations generally have no human contact at all.
You will have either pre-registered:
- a keyfob linked to an account with a payment method; or
- an app with with a linked payment method; or
- there are now some PAYG chargers where you can pay with contactless.
You park up at a charger. Plug your car in, and initiate charging by chosen method.
For the keyfob, you tend to get a monthly account statement.
With the app you have your receipt in the app but depending on the facility may be charged there & then, or on a monthly statement.
The ICE model of: pulling up to a pump, filling up with fuel, and going into the shop to pay afterwards just does not happen with EV's - at least not in my experience
Res ipsa loquitur.
I'm grateful to you for that good insider knowledge. And, to boot, I can cross off knowing someone who actually drives an electric car from my bucket list.
I've always suspected that the old conventional wisdom of a driver having to march into a filling station beforehand in order to inform the (no doubt astonished) staff that their employer was about to contract not with them, the driver, but instead with that driver's employer was made redundant by pay-pumps; those pumps where you pre-register your (or, alternatively someone else's such as for example your employer's) card for payment. Pre-pay fuel pumps, so far as the fuel station's contractual position is concerned, eliminate any doubt as to just who they (the fuel station) are contracting with. It's the cardholder. End of.
Might I impose on your good nature to enquire whether, to your knowledge, one pre-pays for the electric charge? In the same way, let's say, that you might pay in advance for a pre-pay fuel pump or, say again, a car wash at a filling station. Or, alternatively, is electric dispensed in the same way as regular petrol pump fuel, that is to say on trust of payment, so that the contact is made when the petrol/diesel/electric is dispensed and the subsequent payee (regardless of whether the driver or the employer) is not party to that contract?
IMHO that's the crux of the matter.
You don't prepay, do you?
Well, I don't anyway.
I stick my card in and say I'm going to pay with this card. But at that stage, I don't know myself how much fuel I want. I fill the car up and it's only at that point that I know what I owe. By that time, the fuel's in the tank.
Pre-register (which I'msorry sees as equivalent to pre-senting (or pre-declaring) the card to the cashier (the cashier has in effect been electronicafied)), post-pay.
Though it makes sense to me, IANAL and cannot comment hand on heart on the argument. I believe there's a growing body of law on whether and when devices can contract (act, offend etc) on behalf of their owners. Emails, driverless cars, attendant-free pumps and charge points, self service tills, automated penalties from HMRC, etc etc.
.
Though I have had plugin hybrids for 5 years now and went fully electric this year (currently wondering quite why as it was ordered before Lockdown 1 and has done 1,200 miles since delivery in July, but anyway...) I have rarely actually used chargers other than at the office, or home.
The supermarket ones that I have used are free anyway, but when I used one on a motorway as I recall, I used the fob, and the charge turned up on my monthly account statement, so no I don't believe that you prepay.
There are myriad charging services and I presently have 5 different apps on my phone and three RFID keyfobs. All effectively charge me when I use them for charge taken, and none are monthly prepay - again not something that I have ever been interested in signing up for if it did give a reduced rate, as other than for trips to family up country my charging was either free at the office, or at home so there was no point in taking a prepay option to reduce rates.
In terms of pre-registration that is merely to have an active service and payment method set up for the different providers - think ApplePay where you register a card, but only pay when you use your phone to pay rather than find cash or another card and Apple charges your registered credit card.
There are thankfully more becoming available that will work with a credit card and contactless nowadays, so that you don't need the array of apps & RFID's. Not used those (as I have barely left the house for a year) but they might be similar to the forecourt services where you put your card in the machine to authorise the fill up, and then it charges you for the fuel taken.
Do ITEPA 2003, s 149(4), s 239 and s 269 (as well as SI 2001/1004, Sch 3, Pt 8, para 7) not answer your question? As far as I can see, s 237A is only going to be applicable in relation to employees who use their own cars.
See the variables on the Revenue's tool at
https://www.gov.uk/expenses-and-benefits-electric-company-cars
Q1 Who owns the electric car? (employer or employee);
Q2 Who pays to charge the car? (employer, employee, employee who is reimbursed);
Q3 Varying questions regarding business or mixed use; or regarding basis of reimbursing employee (depending upon your answers to Q1 & Q2)
I tend to ignore HMRC misguidance and focus on what the legislation says.
In the situation described by the OP there is no tax or NIC, by reason of the legislation referred to in my rhetorical question.
With respect, that legislation is irrelevant to I'msorry's argument(s).
However, not only does it appear to answer Wilson's question, but it also explains the hoicking out for tax and subsequent fuel BIK discussed above.
That's simply because the arguments concerned aren't at all relevant to the question.
Except to the extent that the crux of the question was who is party to these contracts? Employer or employee?
Your very well-researched references are essentially summarised at
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23900 together with a flow-chart of potential outcomes (not dissimilar to those of my HMRC tool link). The relevance of which is that Employee charges car at home: their employer reimburses the electricity costs is the closest contemplated scenario to that of Wilson's client's circumstance. All of which necessitated leaping merrily into the rudiments of contract law.
Except it didn't; it required reading the tax rules to which the extract you give referred. There is no contract law element to the answer (for tax). (I append "for tax" because Wilson mentioned a disconnect between tax and NIC earlier. I wasn't clear whether that was purely historic, or still a point to check here.)
In which case, TD, both of the Revenue's interpretations of the matter - both their "tool" and the flowchart on their summary page - are implicitly flawed. Here are those HMRC links again:
https://www.gov.uk/expenses-and-benefits-electric-company-cars
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23900
A. Selecting employer owns car, employee pays and is reimbursed by employer, and mixed private/business use yields similar outcomes at each of those HMRC resources: namely that reimbursement is taxed as earnings (so subject to tax/ni); and offset by a claim for business mileage proportion.
B. No argument from me or, for that matter, HMRC's outcomes that if the employer "pays" for the fuel directly no such liabilities arise.
HMRC's outcome "A"above led me to the conclusion that the matter of just who was the contracting party - employee or employer - is the key issue. Apologies for persisting, but can it really be that both HMRC guidance / summary pages have got their reimbursed expenses outcome wrong?
The EIM looks correct to me. I agree the benefit checker is a shocker (oh dear, I've finally succumbed to punning). But, my dear I'msorry, why rely on such tools? Read the legislation.
On this occasion, TD, I find myself far too backwards to interpret the legislation and have instead resorted to HMRC's guidance and interpretation on the matter.
By way of reply, that EIM 23900 yields in its flowchart the following outcome to that same battery of questions:
Under - "Employee charges car at home: their employer reimburses the electricity costs";
Select - "Company owns car";
Outcome - "If private use only or mixed use, reimbursement is taxed as earnings. Employee is entitled to a deduction for the cost of business miles travelled".
"Employee charges car at home... and is reimbursed", above, is as close as that particular EIM gets to Wilson's scenario of charging at a third party venue. But hopefully you'll see my point that that's a second HMRC guidance page which states that taxable is the outcome for such reimbursed expenses.
Notwithstanding The Dullard's point that s237a isn't applicable in this employer-owned car case, EIM01035 offers some parallel guidance / Revenue interpretation. viz:
The exemption [s237a] does not apply to the reimbursement or payment of an employee’s personal expenditure in respect of charging a battery of a vehicle away from the employer’s premises. For example, it does not apply where the employer reimburses the employee’s costs of charging a battery of their vehicle at a motorway service station.
Ok, that's just grist to the mill, but nonetheless provides a third example of a HMRC interpretation in which the identity of the contracting party is crucial: if it's the employee contracting, then the reimbursed expenses aren't covered (by that particular exemption).
If someone who can do number sequencing as well as you is struggling with this, maybe there's more to it than I twigged. I like learning correctly so... thank you for persisting. There's too much to read for a Monday morning in January, but I will revert.
Ha ha, cheers TD, thanks for indulging me!
We evidently have different reasons for arriving at our non-taxable conclusion(s). It's my belief the outcome would be one of taxable if it was the employee contracting. But only because I'm gullible enough to believe the Revenue's alleged guidance on the matter.
Those are the positives and negatives at the current time.
btw: today's a Tuesday, although I shall award you one point for correctly guessing the month :)
Yes, they do. Thanks.