With a growing number of company car owners using electric vehicles, many are deciding or being permitted to use company credit cards to pay for roadside charging.
However, what are the implications of this for the employee and business alike?
The simple answer is there will be no taxable benefit on the employee and no National Insurance Contribution (NIC) charge.
This is because a credit card is a credit token and does not itself produce the electricity to charge the vehicle, and it is, therefore, exempt under Section 269 of ITEPA (Income Tax (Earnings and Pension) Act) 2003.
Currently, electricity is not defined as a fuel. This means it cannot be categorised under fuel benefit purposes, further preventing there being a benefit under ITEPA.
The above should not be confused with the provision of electricity by an employer via a workplace charging point, which is also exempt from a Benefit in Kind charge under a different section of the same Act.
In the context of the National Insurance Contributions (NIC), an obligation for Class 1 contributions arises when the credit card is used to pay for benefits meant for the employee.
However, exceptions are made in situations where no Class 1 NIC is triggered on business expenses or when an employee explicitly states that they are making a purchase on behalf of their employer.
This initially confusing situation has been clarified by past legal cases. It was determined that when an employee informs the seller that a purchase, like fuel, is being made for the employer, it changes the nature of the transaction. The employee is no longer buying for personal use but acting as a representative for their employer.
When they purchase something like electricity on the company’s behalf, they aren’t using the company credit card to pay for a personal obligation. Instead, they are obtaining fuel provided by their employer.
This area of tax and National Insurance legislation is constantly changing and so if you have any queries about the potential charges related to company cars or their “refuelling” it is best to seek professional advice. To find out how we can support you with this, please contact us.
