Why Reimbursing EV Drivers Matters for Tax Compliance

Let’s talk tax. Not exactly a crowd-pleaser, but when it comes to reimbursing electric vehicle (EV) drivers for business travel, it’s crucial – especially if they’re charging at home or out in public. Done right, it keeps your business squeaky clean with HMRC. Done wrong? Well… let’s not go there.

Please remember, the Paua Rangers are specialists in EV charging and we are not tax advisors so don't take this as tax advice. Use the following prompts to speak to your tax advisor!

So, why is tax important?

1. Keep It Clean with HMRC

Business miles need to be just that – business. HMRC likes a tidy log of mileage and charging costs, clearly separated from personal use. Reimbursing only what’s owed for business trips ensures you’re not accidentally footing the bill for someone’s weekend away.

2. Dodge the BIK Trap

Cover personal charging costs and it could be seen as a Benefit-in-Kind (BIK), which comes with its own tax headaches. Sticking to business use only helps keep your drivers happy – and out of the taxman’s spotlight.

3. VAT – Claim What You’re Owed

You can only reclaim VAT on business energy use. So, if a driver is charging at home or at a public charge point, you need proof of the business element to claim it back without risking a slap on the wrist.

4. Know Your Rates

HMRC has set an Advisory Electricity Rate – initially this was 9p per mile but this has dropped to 7p per mile (May 2025) for EVs. Use that or have robust data to justify a different rate. Don’t just guess – unless you enjoy paperwork and investigations.

5. Be Ready for Audits

A solid reimbursement process builds a tidy audit trail. One that shows you’ve played by the rules, paid fairly, and kept everything transparent. That’s gold when the tax inspectors come knocking.

What Happens If You Don’t Get It Right?

HMRC isn’t shy about issuing penalties. Get it wrong and you could face:

- Up to 100% of any unpaid tax if errors are careless or deliberate

- £3,000 per year per missing or incomplete set of records (e.g. mileage logs)

- Extra PAYE, NICs, and Benefit-in-Kind charges for incorrect reimbursements

- Plus: interest and a lovely letter you don’t want to receive

In short – sloppy processes now, can cost you dearly later.

How Paua Can Help

At Paua, we make all this easy. Drivers charge at home, at work, or on the go – and we track, separate, and simplify it all. Our records and processes support your compliance. One app. One card. One clean bill. Reimbursing home and public charging? Sorted.

Want to stay on the right side of HMRC and your drivers? Let’s chat.

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