Q- Some of our clients provide some employees with Company cars that are hybrids. The employees are also provided with fuel cards that are available for their private use and receive a fuel Benefit in Kind in relation to the car. However, the cars are plugged in and charged at home can the employer offset this cost against the fuel Benefit in Kind?
A- No, as the employee is paying for the vehicle to be charged at home this would not qualify for a reduction of the fuel BIK, however, the employee would be able to claim tax relief for the actual cost of charging the vehicle for business purposes.
ITEPA 2003 Section 149 states that a
Car Fuel Benefit in Kind applies when the employer makes fuel available for an employee by reason of their employment and the employee is subject to a Company Car charge in respect of the vehicle under ITEPA 2003 Section 120 or 120A.
ITEPA 2003 Section 152 allows for a proportionate reduction in the Car Fuel BIK in limited circumstances:
- If the fuel is unavailable to the employee for part of the tax year,
- If the fuel is only available for business purposes at any time in the tax year,
- The employee for any of the tax year is required to make a payment for private use of the vehicle and the employee makes good that expense before the 6th July follows the tax year end.
As the employee has the fuel card available for the whole of the tax year and they are not required to make a payment to the employer, no reduction to the Car Fuel BIK would be given.
However, the employee is incurring a cost in charging the vehicle at home and would be able to claim tax relief on a Self-Assessment Tax Return for the actual cost of charging the vehicle adjusted to the business use of the vehicle.