Electric Company Car Charging at Home: Tax Rules Explained 2026/27

Electric company cars have transformed the company car landscape. The 5% benefit-in-kind rate makes a company EV far cheaper to have than any petrol or diesel equivalent, and the rules around home charging add an additional layer of tax efficiency. But the interaction between employer-funded home charging, the HMRC advisory electric rate, home charge point grants, and salary sacrifice schemes creates genuine complexity that trips up both employees and payroll teams.

The 5% electric car BIK rate in context

The benefit-in-kind appropriate percentage for a zero-emission electric company car in 2026/27 is 5% of the car's list price (the P11D value including all factory extras and delivery charges, but excluding first-year registration fees and annual vehicle tax).

Example comparison:

The employer also pays Class 1A NI at 13.8% on the BIK:

• EV: £2,000 x 13.8% = £276/year.
• Petrol: £10,500 x 13.8% = £1,449/year.

The employer's NI saving is significant too, which is why many employers actively encourage staff to choose EVs.

Home charging: the BIK exemption

When an employee charges a company electric car at home, they are using their home electricity supply. The electricity cost is essentially borne by the employee (it appears on their household energy bill). If the employer reimburses this cost, is that reimbursement a taxable benefit?

Under the exemption in ITEPA 2003 s239(3A), no BIK arises when an employer pays for, or reimburses, the cost of charging a company car at the employee's home. This applies regardless of whether:

• The employer pays a third party (e.g., direct to a home energy account) or reimburses the employee.
• The car is charged overnight on a domestic socket or via a dedicated wallbox.
• The home charging covers both business and private journeys (the BIK exemption covers all charging, not just business-related).

This is a significant benefit: essentially free home fuel for all your driving in a company EV, with no BIK charge.

The HMRC advisory electric rate (AER): 7p per mile

The HMRC AER applies in a different context from the home charging BIK exemption. The AER is used when:

1. An employee drives a company electric car and the employer wants to reimburse the electricity cost based on a mileage rate (rather than reimbursing actual cost).
2. An employee uses a company electric car for business trips and HMRC needs a rate to determine whether any reimbursement above the rate is taxable.

The AER for 2026/27 is 7p per mile. If an employer reimburses an employee at 7p/mile or below for business miles driven in a company EV, there is no BIK or taxable income. If the employer reimburses above 7p/mile, the excess over 7p is taxable.

Note that 7p/mile is a fraction of the 45p/mile AMAP rate for private car business travel -- this reflects that the running cost of electricity is much lower per mile than petrol or diesel fuel.

Employer-provided home charge points

An employer can fund the installation of a home wallbox charger for an employee to charge a company electric car. HMRC treats this as an exempt benefit provided it is used solely for charging the company car.

Key conditions:

• The charge point is for a company car, not the employee's own privately-owned vehicle.
• The charge point is provided to the employee (not purchased by the employee and reclaimed).

If the wallbox is installed and the employee subsequently leaves the company or returns the car, the wallbox may need to be removed or transferred -- unless the employer decides to treat the wallbox as a gift to the employee (which would then be a taxable benefit at market value).

Salary sacrifice electric car schemes

Salary sacrifice for company cars is a well-established benefit, but electric vehicles benefit from a specific carve-out that makes them particularly attractive.

How salary sacrifice works for cars:

• You sacrifice a portion of your gross salary.
• In return, the employer provides a company car.
• You avoid income tax and NI on the salary sacrificed.
• Instead, you pay BIK tax on the company car.

The alternative valuation rule (OpRA) for non-EVs: For most salary sacrifice benefits, the taxable amount is the higher of the BIK value and the salary sacrificed. This limits the benefit of sacrifice where BIK is low.

The EV exemption: Ultra-low emission vehicles (ULEVs -- with CO2 emissions below 75g/km, including all pure electric cars) are exempt from the alternative valuation rule. This means the taxable BIK for a sacrificed EV is the standard BIK (5% of list price) regardless of how much salary was sacrificed.

Example: Salary sacrifice of £500/month for a £40,000 electric company car.

• Salary sacrificed: £6,000/year.
• BIK value: £40,000 x 5% = £2,000/year.
• Tax paid: on BIK value of £2,000 (not on salary of £6,000).
• Higher-rate taxpayer saves: £6,000 x 40% income tax + £6,000 x 2% NI = £2,520/year.
• Minus BIK tax cost: £2,000 x 40% = £800/year.
• Net saving: £1,720/year compared to taking the equivalent cash salary.

The employer also saves employer NI at 15% on the sacrificed salary (less Class 1A on the BIK) -- a genuine win-win.