HMRC has updated its guidance on benefits connected with electric company cars, providing greater clarity for employers offering EVs through company car or Salary Sacrifice schemes.
The July 2026 update confirms that employer-funded home chargers, workplace charging and public charging cards can generally be provided without creating an additional taxable benefit. However, solar panels and home-battery systems are treated differently and may result in a separate Benefit-in-Kind charge.
Here, Lease Electric explains what the updated guidance means for employers and electric company car drivers.
Electric Car Benefit-in-Kind Tax Treatment
| Provision | Company Car Made Available for Private Use | Employee’s Car Used for Business |
|---|---|---|
| Employer allows cars to be charged from a vehicle charging point at work | No taxable benefit. Electricity does not sit within the meaning of fuel, so the Fuel Benefit Charge does not apply. There is no further benefit charge, as Section 239(4) ITEPA 2003 specifically excludes a benefit connected with a taxable car. | Before 6 April 2018, a taxable benefit applies based on the cost to the employer. From 6 April 2018, see EIM01035. |
| Employer pays for a vehicle charging point to be installed at the employee’s home | No taxable benefit because of Section 239(4) ITEPA 2003. | Taxable benefit based on the cost to the employer. |
| Employer pays for solar panels and/or a home battery to be installed at the employee’s home | Taxable benefit based on the cost to the employer. Section 239(4) ITEPA 2003 applies only to benefits necessary for the provision or running of the taxable car. Here, the connection with the taxable car is too remote for the exemption to apply. | Taxable benefit based on the cost to the employer. |
| Employer pays for a charge card allowing individuals to access public charging points | No taxable benefit because of Section 239(4) ITEPA 2003. | Taxable benefit based on the cost to the employer. |
| Manufacturer leases the battery separately from the car | The cost of the battery forms part of the list price. The car will not function without it, so it must be treated as integral to the vehicle, like its wheels. | Not applicable. |
| List price includes the cost of the battery | Use the list price. | Not applicable. |
| List price does not include the cost of the battery | Use the notional list price. | Not applicable. |
| Employer pays to lease a battery for a privately owned car | Not applicable. | Taxable benefit based on the cost to the employer. |
| Mileage allowances | See the Advisory Electricity Rate (AER) guidance. | Authorised Mileage Allowance Payments (AMAPs) apply to business travel. If the employer does not use AMAPs or pays less than the published rates, the employee may claim the appropriate tax relief through Mileage Allowance Relief (MAR). |
Employee Charges the Car at Work
| Stage | Action | Outcome |
|---|---|---|
| Stage 1 | Who owns the car? | If it is a company car, there is no additional benefit. If it is the employee’s car, go to Stage 2. |
| Stage 2 | When was the car charged? | If it was charged before 6 April 2018, go to Stage 3. If it was charged after 5 April 2018, see EIM01035. |
| Stage 3 | What is the car used for? | If it is used privately only, the cost of the electricity used is taxable as a benefit-in-kind. If it is used for business only or for mixed use, the total cost of the electricity used is taxable as a benefit-in-kind. There is no matching deduction. If AMAPs are not received, MAR may be available. |
Employee Charges the Car at Home or at a Public Charging Point: Employer Reimburses the Electricity Costs
| Stage | Action | Outcome |
|---|---|---|
| Stage 1 | Who owns the car? | If it is a company car, go to Stage 2. If it is the employee’s car, go to Stage 3. |
| Stage 2 | What is the car used for? | For business and private mileage, the exemption under Section 239(2) ITEPA 2003 means there is no separate tax charge under the benefits code when an employer reimburses an employee for electricity used to charge their company car at home or at a public charging point. Employers must ensure the reimbursement relates solely to the company car. |
| Stage 3 | What is the car used for? | If it is used privately only, the reimbursement is taxed as earnings. If it is used for business only or for mixed use, go to Stage 3a. |
| Stage 3a | How is the reimbursement calculated? | If it is calculated by reference to mileage, AMAP rules apply to the business miles travelled. Amounts paid above AMAP rates are taxable. If the payment is below AMAP rates, the employee may claim the appropriate tax relief through MAR for business mileage. A flat-rate payment is taxed as earnings. |
Employee Charges the Car at Home or at a Public Charging Point: Employer Does Not Reimburse the Electricity Costs
| Stage | Action | Outcome |
|---|---|---|
| Stage 1 | Who owns the car? | If it is a company car, go to Stage 2. If it is the employee’s car, go to Stage 3. |
| Stage 2 | What is the car used for? | If it is used privately only, there are no tax implications. If it is used for business only or for mixed use, the employee is entitled to a deduction under Sections 337 or 338 ITEPA 2003 for the electricity cost relating to business mileage. |
| Stage 3 | What is the car used for? | If it is used privately only, there are no tax implications. If it is used for business only or for mixed use, MAR may be available if AMAPs are not received. |