When you have an electric car (EV) it’s a priority to know where and when you can successfully charge it. Charging an EV at home is an obvious preference but it’s not always an option if you don’t have a drive, garage or an allocated parking space and therefore no home charging point installed. Workplace EV charging is one solution to this and it’s not just beneficial for employees, there are benefits to charging EV's at work for employers as well.
So if you’re wondering “how to charge my EV at work” or if you are an employer and want to know the savings you could make by investing in electric car charging installation at your workplace you’ll find answers here…
Benefit-in-Kind (BIK) and Class 1A National Insurance Contributions (NICS) Savings
NICS payments must be paid on each vehicle a company provides to its employees. The payments are calculated partly using the BIK which is rated by the amount of CO2 emissions of the car. Low or zero emissions plug-in vehicles offer considerable savings over an equivalent petrol or diesel vehicle.
Capital Allowances on Electric Cars
Vehicles with CO2 emissions of less than 50g/km are eligible for 100% first year capital allowances (deducting the full cost from your pre-tax profits) offering a saving of £7,600 for a car costing £40,000.
Capital Allowances on Electric Charging Points
Businesses can benefit from a ‘super-deduction’ until 31 March 2023: 130% first-year allowance on qualifying electric charging points for cars and vans if used for the business. It makes business sense to benefit from these money saving initiatives while they are in place so the inevitable cost of installing the infrastructure for accommodating electric vehicles is cheaper.
Congestion Charge Exemptions
Electric vehicles are exempt from a congestion or Clean Air Zone charge tax – currently £9 - £11.50 per day. More cities are due to have these taxes implemented by 2023.
Road Tax on Electric Cars
Road tax, or Vehicle Excise Duty (VED), is based on carbon dioxide emissions. Pure electric vehicles will remain at £0 until at least 2025. There are reduced VED rates for plug-in hybrid electric vehicles (PHEVs).
Benefit-in-kind rates increasing
The electric car tax benefit-in-kind rate increase from 1% to 2% in 2022/2023 and remain fixed until 2024/2025, helping businesses to plan ahead.
The Government provides grants of up to £2,500 towards the cost of eligible plug-in vehicles that cost less than £35,000. It’s applied at the time of purchase and is usually given as a discount off the purchase price. The vehicle must have an electric range of at least 70 miles and if it’s a plug-in hybrid, the vehicle must also have combined CO2 emissions of 50g/km or less. This means all major full battery electric vehicles (BEVs) qualify, but few PHEVs are eligible.
There is also a grant of £3,000 for each small van (less than 2,500 kg gross vehicle weight) and £6,000 for each large van (between 2,500 kg and 3,500 kg gross vehicle weight).
Benefit-in-Kind on Company Cars
Company car tax, officially known as Benefit-in-Kind Tax (BIK), is calculated using the value of the vehicle and the employee’s income tax band and, its CO2 tailpipe emissions to lower BIK rates for the more fuel efficient, electric vehicle. This means a typical business driver (a 40% taxpayer, collected through PAYE) could spend approximately £8 - £12 a month when using an electric vehicle or £300 - £400 a month for a standard diesel or petrol vehicle.
Workplace Charging Tax Exemptions
There is no benefit-in-kind charge for employees charging their own cars at a workplace charging station – even where there is private use of the car. For this tax exemption to apply, the charging facilities must be provided at or near the workplace, which is the same requirement that applies to tax-free workplace parking. This tax exemption does not apply to any reimbursed costs of charging the employee’s own vehicle away from the workplace, such as at a motorway service station.
When an employee pays for the charging costs of a company provided vehicle, the employer may reimburse the employee for the full cost if using a roadside charger and the vehicle has been used only for business journeys or at a rate of 4p per mile with no tax implications when used for business journeys and charged by a home charging point. For privately owned vehicles, the company can pay the tax-free mileage allowance of 45p per mile for the first 10,000 annual miles and a rate of 25p per mile thereafter.
Employee Home Charging Tax Exemptions
Should an employer pay for all (or some) of the installation cost, including the cost of the charging point (less Government Grant), of a vehicle charging point at the employee’s home, there is no benefit-in-kind implications to be considered.
To help private plug-in vehicle owners offset some of the upfront cost of the purchase and installation of a dedicated domestic recharging unit, the government offers the Office for Zero Emission Vehicles (OZEV) Electric Vehicle Homecharge Scheme (EVHS). From 1 April 2020, customers who are the registered keeper, leasee or are the primary user of an eligible electric vehicle can receive up to 75% (capped at £350) off the total capital costs of the charge point and associated installation costs. Grants can be claimed at a rate of one home charger unit per vehicle and for up to two vehicles per household.
The money savings are obviously appealing but there are other benefits too. As an employer you will demonstrate that you are forward thinking, progressive and encouraging employees to lead a greener life. This will make you a desirable company to work for and attract suitable candidates – an important consideration in a competitive market. With 80% of electric vehicle charging done at home and work, it’s a great incentive for employees to have free, or access to an EV charge point while they are working and increases the levels of pride in their employer – which also helps increase productivity so everyone wins!
The outgoing costs for the employer probably aren’t as much as first though with great tax savings and grants available. For employees, the feeling of being proud of who they work for shouldn’t be underestimated.