electric company car

electric company car

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Has anyone agreed a reimbursement rate with HMRC for business mileage in an electric company car within a dispensation or advised on what HMRC might accept as a flat pence per mile rate recently?

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By dnicholson
11th Aug 2014 18:09

Company car?
If it's a company car why is there a reimbursement? Just curious since I drive an electric company car :)

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By Jamie Roberts
12th Aug 2014 07:13

For business mileage travelled.

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Replying to HS2:
RLI
By lionofludesch
12th Aug 2014 10:39

Private Mileage

Jamie Roberts wrote:

For business mileage travelled.

Just business ?  Aren't we still on zero % benefits for electric cars until April 2015 ?  Why not private mileage too ?

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By DMGbus
12th Aug 2014 08:22

Presumably it is fuel costs for the car?

If it is a company owned vehicle then I assume that the reimbursement referred to is for the fuel element where the employee rather than the company incurs the refuelling costs, ie. electricity used for charging.

Unlike liquid fuelled vehicles I have not seen any published rates for such reimbursement of recorded business mileage, as a starting point I would suggest such costs are of the order of 3 pence per mile.

Here's an example of the arithmetic:

1,483 kwh used for 6,459 miles.

So 4.356 miles per kwh

Unit rate 13.00 pence per kwh.

Cost per mile is therefore 13.00 divided by 4.356

equals 2.984 pence per mile.

Or 1,483/6,459 x 13.00 = 2.984 pence per mile

If the EV is actually a PHEV, ie. is a plug in hybrid, then I suggest the normal liquid fuel rates apply as PHEVs usually have a petrol engine as well as a plug socket for charging and traction battery.

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By Steve Kesby
12th Aug 2014 09:24

You need to have evidence...

... of actual expenditure. You're in the same position as if you had a petrol/diesel company car and the company had its own fuel tank and there were also places in the town centre that you can top up for free.

You need to be able to demonstrate that there was actual expenditure. If you could do that, you might even know how much it is.

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By Jamie Roberts
12th Aug 2014 17:46

Home charging - 100% electric company car

If I charge my company car at home can my employer pay me 3p per business mile (which seems reasonable) with out having to payroll it? Or should this be a P11D Dispensation item agreed with HMRC before they can pay it gross  

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RLI
By lionofludesch
12th Aug 2014 18:52

Scale Charge

Yes, you can sell electricity to your employer - technically there's a scale charge on you if you use the car for private mileage but the rate is 0% until April 2015.

Sadly, it'll go up to 5% from then - haven't done the sums yet to see how that pans out.

The point I was making is that you can charge him for private mileage too (if he's willing to include it in your salary package, obviously).

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By Steve Kesby
12th Aug 2014 19:56

There's no scale charge

Because ITEPA 2003, s. 149(4) says that electricity isn't fuel for the purpose of fuel benefit.

Since it's possible to charge electric card for free at the local council's expense, then unless you can demonstrate that you've actually incurred expenditure on charging the car, any amount paid will just be treated as extra pay.

The way to find out whether or not you'll get a dispensation is to apply for one. My guess is that they won't give it unless the employer is only reimbursing proven actual expenditure.

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By DMGbus
12th Aug 2014 22:46

"Free" charging of EVs / PHEVs not certain

It is NOT a certain fact that free charging is available for EVs / PHEVs.

It depends upon a number of factors.

Several different suppliers of charging facilities, there is not always cross-compatibility - an RFID card for one network might not work on another network.   Often "free" charging is only obtainable by subscription (eg. £10 a year).   Most likely charging will be at home overight and not free there.   To use certain charging facilities a special charging lead at a cost of several hundred pounds can be sometimes required.

I have seen recent reports of charging costs from some charging stations being far more per mile that petrol or diesel fuel per mile.

So far from a foregone conclusion that all charging for EVs is free.

There are various ways to "prove" (or close to prove) the cost of home charging.

Record of home electricity consumption - year before EV / PHEV bought then compared to first year of having EV / PHEV - extra kwh @ unit rate = likely extra costs.

In my case, over 2 years, I've only had two free battery charges (in each case the servicing garage).

 

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By dnicholson
13th Aug 2014 09:16

Too much variability
"Record of home electricity consumption - year before EV / PHEV bought then compared to first year of having EV / PHEV - extra kwh @ unit rate = likely extra costs."

Well in my case the variability in my electricity usage masks the car. It costs about £3 to charge my car, but since I have electric heating my bill varies with the weather.

So although you may have an individual case, I doubt whether you could make a general rule based on that policy.

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By Steve Kesby
13th Aug 2014 10:00

Sub meters

In the one case I've dealt with of an employee being reimbursed for home charging of the electric car, the employer provided the employee with a sub meter, so that the cost of charging could be measured accurately.

The provision of a sub meter for this purpose falls then within the ITEPA 2003, s. 239 exemption from being a BIK.

My expectation is that HMRC will also want evidence of actual expenditure, rather than attempts to blind them with science.

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By DMGbus
13th Aug 2014 10:49

Easy to ascertain electricity costs for some

My car records kwh consumption and miles in EV mode from which cost per mile as already stated arrived at.  Car display photographed as evidence.  No public chargers used so all power paid for at home. Yes, I did have a power monitor for a while it served no purpose in view of my circumstances.  If I used public chargers I'd record these instances and I expect charging network would record this.

I can appreciate that some other people could have difficulties (ie. using public chargers and not recording it). 

I'm sticking with my original suggestion of 3 pence per mile.

HMRC's liquid fuel rates are a "broad brush" average approach not requiring proof.

HMRC are are not yet upto speed with EVs so have not done the maths themselves and published any fuel cost per mile figures, reasonable maths should be adequate to demonstrate costs.

 

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By Jamie Roberts
14th Aug 2014 12:25

HMRC view

I've spoken to HMRC and they have been advised by Policy that if my employer makes a payment to me for business mileage in my electric car then this payment needs to be taxed/NIC through payroll. HMRC do no view electricity as a fuel so advisory fuel rates do not apply. Seems harsh that I can incurred a business expenses but can make a tax free claim

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Replying to johnhemming:
RLI
By lionofludesch
14th Aug 2014 18:25

Too small

Jamie Roberts wrote:

I've spoken to HMRC and they have been advised by Policy that if my employer makes a payment to me for business mileage in my electric car then this payment needs to be taxed/NIC through payroll. HMRC do no view electricity as a fuel so advisory fuel rates do not apply. Seems harsh that I can incurred a business expenses but can make a tax free claim

Too small to take to Tribunal but I'd be interested to hear HMRC's justification that electricity isn't a fuel.  I do accept that petrol/diesel advisory fuel rates don't apply but see no reason why there shouldn't be an electricity rate.

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By dnicholson
15th Aug 2014 09:16

On the other hand
"Seems harsh"

On the other hand you've had 3 years of no taxable benefit.

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By pauljohnston
15th Aug 2014 13:39

Have I missed the point

but an expense incurred on behalf of an employer is reclaimable. Since there is no BIK on private use why not just bill the employer (using a meter as Steve K has suggested)

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By mickeyparish
15th Aug 2014 17:26

Forgot the VAT ?

Shouldn't 3p per mile +5% VAT should be reimbursable ?

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By aburt01
18th Aug 2014 11:08

In my electric car ...

I travel on business.  I expend on insurance, maintenance, tyres, electricity etc. to enable that travel to happen.  Some of the electricity is free at point of delivery, I have various subscription cards to enable that charging to take place and cables purchased.

I agree that all of these things were necessary for my private use of the car, except the electricity for the business journey, but I was under the impression that the tax free 45p reimbursement rate, when using the old diesel, on my first 10,000 business miles included maintenance, tyre wear etc. as part of the agreed 45p.p.m. cost.

I expect my employer to be given a rate, even if just 3p or so, that they can reimburse my business travel to at least reflect those additional costs.

Someone, it seems to me, is plainly behind the times.

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By Steve Kesby
18th Aug 2014 11:25

Someone plainly behind the times

If that somebody is me, it will be because I've read the OP, and observed that the electric car in question is a company car. Accordingly, I have assumed that all the other costs that you refer to will have been borne by the company.

The "rate" for an electric car owned by an employee is, of course, 45p per mile for the first 10,000 miles and 25p thereafter.

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By dnicholson
18th Aug 2014 11:34

Be careful what you wish for
If more rules get written (or rewritten) for electric cars, it will bring forward the day they find a way to add fuel tax and full rate VAT to the electricity that is used.

Although I'm not sure that the OP's question is really a car question at all.

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By pauljohnston
18th Aug 2014 11:44

@Steve Kesby

having read your note and the OP's question and his response to the the the first question.  I believe this is a private car being used on his employer's business.  Thus I agree 45p per mile and 25p per mile for greater than 10,000 miles.

If anyone feels this is strange please explain the the push bike rate!

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By aburt01
18th Aug 2014 14:32

thank you ...

perhaps my employer is confused, perhaps I am, either way, you seem to be saying that a privately owned car, used for business, the tax-free portion is 45p per mile, if so I need to challenge my employer...

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By Steve Kesby
18th Aug 2014 14:49

Yes...

... that's what I'm saying the tax position is. Your employer isn't obliged to pay you 45p/25p though.

However, if your employer pays less than the 45p/25p, then you can claim the difference as a tax deduction and get tax relief on that amount at 20%/40%/45% (whatever are the top rates you pay at).

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