This exemption only applies when employees charge their vehicles at the workplace and does not cover reimbursement if the employee charges elsewhere. The measure also does not apply to taxable cars and vans as these are taxable as benefits in kind, and the provision of charging facilities and electricity are treated as connected costs already subject to a separate exemption.

Previously, where an employer provides facilities for charging their employees’ all-electric or plug-in hybrid vehicles at the workplace, this was treated as a taxable benefit in kind subject to income tax for employees and employer Class 1A National Insurance contributions.

Through this exemption the government is hoping that the take-up of cleaner, less polluting vehicles will increase.

The measure will retrospectively apply from 6 April 2018 and is not expected to have a significant impact on the Exchequer.

HMRC as part of the Finance Bill 2018-19 has also extended the income tax and NICs exemption for emergency vehicles to cover all commuting journeys.

This measure ensures that a small number of employees in the emergency services will not face an immediate, significantly increased taxable benefit charge for the private use of their emergency vehicle following changes to the ‘use of assets’ legislation in Finance Act 2017.

It will allow further time for them to unwind existing contractual arrangements before they are affected by the rule changes.

HMRC says that it understands that emergency services require flexibility to maintain fast response times and hopes that this measure will encourage employees to take vehicles home.

The legislative changes introduced by the measure will apply retrospectively from 6 April 2017. The transitional arrangements for emergency vehicles will expire after 5 April 2020.

Incentivising cleaner vehicles

To further encourage individuals to invest in a low emission vehicle, HMRC is proposing to change the HGV levy so that it becomes more in line with vehicle emissions, with lorries that do not meet latest emission standards expected to pay 20% more.

Currently the HGV levy is set at up to £10 a day or £1,000 per year, depending on the vehicle’s size and weight.

The newest lorries generate 80% less nitrogen oxide (NOx) emissions than older ones, so from 1 February 2019, lorries meeting the latest Euro VI emissions standards will be eligible for a 10% reduction in the cost of the HGV levy. Lorries that do not meet the latest emissions standards will be expected to pay 20% more, except where the levy is already set at its maximum rate allowable under European legislation.

This measure is not expected to have an impact on the Exchequer until 2020-21 when it will cost £5m, rising to £10m in 2021-22 and £15m in 2022-23.

Now that electric taxis are have been introduced, HMRC is proposing to exempt purpose-built zero-emission capable taxis from the Vehicle Excise Duty (VED) supplement for cars with a list price of over £40,000.

Currently, most new purpose-built capable taxis are currently liable to pay the VED supplement as they have a list price of over £40,000. Drivers of other vehicles used as taxis or private hire vehicles/private hire cars have many choices of vehicle that cost less than £40,000 so government is legislating to introduce exemptions from the VED supplement.

Purpose-built zero-emission capable taxis registered on or after 1 April 2017 will pay the VED supplement until their VED is renewed on or after 1 April 2019.

This measure is expected to have a negligible impact on the Exchequer.

Workplace charging for all-electric and plug-in hybrid vehicles is here. 

Changes to the treatment of emergency vehicles for private use is here. 

HGV levy tax information and impact note is here. 

Exempt zero-emission capable taxis from Vehicle Excise Duty expensive car supplement is here. 

Report by Amy Austin