• Managing electric vehicle recharging at home is a complex process requiring careful management
• The Government Advisory Electricty Rate aims to support businesses but can leave drivers under compendated
• Paua reimburse has been built with leading fleets to enable a simple way to fairly reimburse drivers

How to manage electric vehicle home charge reimbursement

Navigating the intricacies of electric vehicle (EV) mileage reimbursement can feel akin to mastering a new language in the ever-evolving realm of business travel. Despite the uncharted territory, where each electric mile signifies a transformative shift from traditional combustion engines to silent electric motors, establishing clear guidelines becomes imperative for fairness and precision as well as tax compliance. Let's embark on this electrifying journey together, where miles transcend mere dashboard numbers, embodying tangible value in the rapidly expanding world of EVs.

Paua is the provider of the UK's largest electric vehicle fuel card charging network. In this informative article we will aim to cover key topics surrounding the considerations a business needs when managing home electric vehicle charging reimbursement.

1. Understanding EV Mileage Reimbursement
2. Reimbursement Policies for Company-Owned Electric Vehicles
3. Claiming Mileage for Privately-Owned Electric Cars
4. Paua Reimburse; overcoming the challenge
5. Frequently Asked Questions about reimbursement

Understanding EV mileage reimbursement

Introduction to EV mileage reimbursement

Electric vehicles not only signify a shift towards sustainable transportation but also introduce challenges in traditional practices like mileage reimbursement. As more employees opt for electric vehicles, companies must swiftly adapt, ensuring accurate reimbursement that goes beyond adjusting figures — it's about comprehending the essence of EVs transforming our roads and corporate perspectives.

Electric drivers are offered three key locations to re-charge; home, the workplace and in public. Public charging is Paua's speciality but increasingly we are being asked to support businesses with drivers who charge at home.

As soon as you enter the world of reimbursing drivers for charging at home you introduce certain tax implications as reimbursement aligns itself strongly with payroll. Tax compliance and understanding what can be done become key.

Importance of Accurate Reimbursement for EV Mileage

Precise reimbursement for EV miles is where fairness aligns with fiscal prudence. Employees seek just compensation for business-related vehicle use, while employers benefit from meticulously calculated reimbursements, reflecting actual expenses without unnecessary costs. This upholds sound financial practices and fosters trust within teams.

As already mentioned the accurate reimbursement aligns with the expectations of HMRC.

Challenges in Accurately Reimbursing EV Mileage

Accurate reimbursement faces complexity unique to EVs, such as varying costs between charging locations versus the more consistent pricing of traditional fuels. Where a litre of petrol or diesel can be fairly even across multiple locations the cost to charge an EV can vary by orders of magnitude between home and public. Overcoming these hurdles requires a keen awareness of these factors when establishing an accurate framework for EV mileage reimbursement.

Reimbursement Policies for Company-Owned Electric Vehicles

Navigating reimbursement protocols for corporate EV fleets can be a labyrinth of policy details and tax considerations.

Some good resources to review for further information include

• Comcar - company car tax
• HMRC - Check if you need to pay tax for charging an employee's electric car
• Fleet News - frequently asked questions by fleets

A couple of key insights you will learn

Electricity is not a fuel

Electricity is not a fuel. HMRC do not regard electricity as a fuel.

No additional tax where a company pays to refuel a company electric car

If the company owns the car and pays to put electricity in the car there are no further tax implications. Equally if the company owns the car and the driver only does business miles and is fully paid back then there is no tax implication.

If your employee drives the car for personal use taxation is required

If your employee drives the car for personal use taxation is required. If you reimburse the driver without the right methodology then the payment is treated as income and is subject to PAYE tax and Class 1 National Insurance through payroll.  

However this can be overcome with solutions such as Paua Reimburse.

Factors to Consider when Determining EV Mileage Rates for Company-Owned Cars

Calculating reimbursement rates for company-owned electric vehicles involves examining various factors:

Electricity Costs: Vary significantly by charging location (home v public), by home tariff and by public tariff and even by time of day.

Distance Considerations: Longer trips may require public charging station detours, impacting overall travel time and costs as well as costing more to charge

Sharing of home chargers; increasingly more than one person can charge at a home charger with other family members adopting electric as well as the rise of charge point sharing software.

Ensuring only company mileage is reimbursed; validating the trips conducted and the miles driven.

Efficiency of driving; differences in vehicle efficiency and also driver efficiency can change the amount of energy consumed.

Incorporating these variables ensures fair employee reimbursement while justifying the company's expenses.

What is the Advisory Electricity Rate?

The Advisory Electricity Rate (AER) is the rate determined by Government that you can pay an employee without incurring any additional taxation. If you pay more than the AER then there is taxable profit and Class 1A National Insurance to pay. The current Advisory Electricity Rate from December 2023 is 9 pence per mile.

Rates are published here. The AER covers fuel costs incurred while driving for business but they don’t account for other vehicle-associated costs like insurance and repairs.

The AER is calculated using prices from:

• Department for Energy Security and Net Zero (DESNZ)
• Office for National Statistics (ONS)
• car electrical consumption rates from the Department for Transport (DfT)
• annual car sales volumes to businesses (Fleet Audits average for the last 3 years)

Managing company car programs in the UK requires staying updated with Advisory Fuel Rates (AFRs) set by HM Revenue & Customs (HMRC). The rate has varied from 4 pence per mile since its inception in 2018.

What is wrong with the Advisory Electricity Rate?

It is increasingly recognised that the Advisory Electricity Rate undercompensates drivers. Public charging costs more than home charging. Paua estimates that after a driver does more than 18% of their charging away from home then the AER undercompensates a driver. With business drivers doing higher miles this can lead to drivers being thousands of pounds out of pocket.

Claiming Mileage payment for privately owned EV's

When a vehicle is privately owned different rules apply.

Navigating mileage reimbursement for privately-owned EVs can be puzzling as businesses adapt to increased EV usage. Learn how employees can submit claims for mileage allowance when using personal electric cars for work-related travel.

Is it your car?

With the rise in ways to pay for and finance a vehicle it is important to understand whether it is your car you are claiming for. It is important to note that if you benefit from a Salary Sacrifice mechanism then the car belongs to the company and not to you.

If you finance the car or take a cash payment from the business then it is your car.

Use of the Approved Mileage Allowance Payments

The simplest way to pay for a private cars mileage is with the use of the Government Approved Mileage Allowance Payments. This rate is not impacted by fuel type and can be found on Comcar here and here on the Government website.

Paua Reimburse; overcoming the challenge

Paua Reimburse is a single solution to pay for business charging at home, work or on the road.

Paua makes it easier for fleets to compensate drivers for business miles when they charge at home. A comprehensive programme over the last 12 months has seen Paua develop a market leading proposition for reimbursing drivers.

Paua Reimburse offers two routes to fairly compensate drivers; full cost reimbursement and "the reverse AER method".

The benefits of Paua Reimburse

With Paua Reimburse you can

• Fairly compensate your EV drivers “everywhere they charge”. Paua everywhere
• Accurate and auditable mileage capture. Say goodbye to guesswork
• Works with any vehicle, Any charger, Any tariff. Home charging benefits without compromise.

Contact us to find out more.

Frequently asked questions

Is Paua Reimburse a HMRC approved approach?

Yes. Paua clients have received HMRC tax approval for both versions of Paua Reimburse. You should always seek your own tax advice.

How do you determine the reimbursement rates for EV's?

A combination of data points is required. Paua simplifies the process to create an auditable approach to capturing this data. Importantly this is integrated with the Paua EV charge card capturing all public charging data.  

What should be done about regular home to office commutes?

Most businesses do not allow a driver to claim for their regular home to office commute. Paua enables this to be set and automatically excluded in mileage calculations.  

Can Paua Reimburse be used with any home charger?

Yes. Paua realises that most businesses have already installed home chargers or do not want to be tied to one suppliers list of compatible chargers. Therefore Paua Reimburse works with any charger.

How do I get Paua Reimburse?Contact us to find out more.