Amid the increasing prevalence of electric vehicles amongst company car users, many individuals are choosing or being authorised to utilise company credit cards for payments at roadside charging stations. What, then, are the repercussions of such practice for both the employee and the company?
In short, this incurs neither a taxable benefit for the employee nor a National Insurance Contribution (NIC) demand. The reasoning behind this is that a credit card is considered a credit token, not a direct source of electricity to power the vehicle. Hence, it is exempted as per Section 269 of ITEPA (Income Tax (Earnings and Pensions) Act) 2003.
At present, electricity is not classified as a fuel. As a result, it cannot be classified under fuel benefit purposes, which further reinforces the absence of a benefit under ITEPA.
This scenario should not be confused with employers providing electricity via workplace charging stations, which is also exempt from a Benefit in Kind charge under a different segment of the same Act.
With regards to National Insurance Contributions (NIC), a Class 1 contribution requirement emerges when the credit card is used for employee benefits. However, exceptions occur when no Class 1 NIC is levied on business expenses or when an employee explicitly states they are making a purchase for the company.
This potentially perplexing situation has been clarified through past legal instances. It was established that when an employee informs the seller that a purchase, such as fuel, is being made on behalf of the employer, it alters the transaction’s nature. The employee is no longer purchasing for personal consumption but acting as an emissary for the employer.
When they buy something like electricity on behalf of the company, they aren’t using the company credit card for personal expenses. They are instead acquiring fuel provided by their employer.
Given the ever-evolving landscape of tax and National Insurance legislation, it is prudent to consult a professional should you have any questions about potential charges associated with company vehicles or their “refuelling”. To understand how we can assist you in this regard, please get in touch with us.
