Home charging reimbursement: how UK employers repay company EV drivers in 5 steps

A UK employer can repay all the electricity a company EV uses at home, private miles included, with no Income Tax and no National Insurance, as long as the payment relates solely to the company car. The only real choices are how you value each kWh (the driver's actual tariff or HMRC's 7p per mile) and how you prove that the energy went into the car and not into the kettle.

This guide is for fleet, HR and finance managers who need a working process, not a tax lecture. It covers the rule in two paragraphs, the three reimbursement methods, a costed example on 50 drivers, the payroll and record-keeping side, a policy checklist and the mistakes that cause disputes. It is written from what we see at the 200+ companies that use Voltaback to measure and reimburse home charging, and it works whatever tool you choose.

In short (checked against GOV.UK on 3 November 2026). Actual cost and the Advisory Electricity Rate (AER) are both acceptable to HMRC. Actual cost pays each driver what they really spent, at 26.32p per kWh on the standard price cap or under 9p on an EV off-peak tariff. The AER pays a flat 7p per business mile charged at home and 15p on public chargers. On a 50-car fleet the gap between the two methods runs to several thousand pounds a year, in one direction or the other.

The rule: car versus household, not business versus private

Most employers start from the wrong question. With petrol or diesel, the line that matters is business versus private fuel, because free private fuel triggers the car fuel benefit charge. Electricity is different.

HMRC's Employment Income Manual is explicit on three points:

• Electricity is not "fuel" for company car purposes, so the fuel benefit charge never applies to a fully electric car.
• When an employer reimburses the cost of charging a company car at home, there is no separate charge to tax under the benefits code, because of the exemption in section 239(2) ITEPA 2003. This covers business and private mileage alike.
• The condition: the employer must ensure that the reimbursement is solely for the company car.

National Insurance follows the same line: no Class 1 or Class 1A contributions on a reimbursement that relates only to the company car. Sources: HMRC EIM23900 (updated 3 November 2026), HMRC NIM06440.

So the split you must evidence is the car's kWh versus the rest of the home's consumption. Splitting business from private miles is optional: you may choose to pay only business miles as a matter of policy, but nothing in the tax rules forces you to.

Two consequences follow. A blanket "electricity allowance" in pay that is not tied to the car's consumption is earnings, taxed and subject to NIC. And a reimbursement based on the whole household bill fails the "solely for the company car" test. The rest of this guide is about avoiding both.

For drivers using their own car for work, the rules are different (the 55p and 25p mileage rates). Our article on HMRC electric car mileage rates explains AMAP, the AER and where each applies.

What home charging really costs, and why it is your biggest lever

Take a company car covering 12,000 miles a year at a realistic 0.32 kWh per mile (about 3.1 miles per kWh, a mid-size EV in mixed UK driving). It needs about 3,840 kWh a year. Here is what that energy costs depending on where it is bought:

Sources: Ofgem price cap, 1 October to 31 December 2026, direct debit, GB average; Zapmap Price Index, September 2026. Our calculation.

Two details matter for the home rows. First, domestic electricity in Great Britain is zero-rated for VAT from 1 October 2026 to 31 March 2027, so the price cap figure already includes no VAT (GOV.UK, temporary zero rate of VAT for domestic electricity). Second, the price that matters is the marginal price of a kWh, the unit rate. The standing charge (54.83p a day on the cap) is paid whether or not the car charges, so it is not part of the car's cost.

The indicator to track is the home share of charging. Every 10 points of charging moved from rapid public chargers to a home on the price cap saves about 384 kWh × (79p − 26.32p), so roughly £200 per car per year. On 50 cars, moving from 60 % to 80 % home charging is worth about £20,000 a year. On an EV tariff the saving is larger still.

What pushes drivers away from home charging is poor reimbursement. A driver who is paid back less than they spend, or months late, starts using the company charge card at the motorway services. The home charging cost simulator gives the figure for your own fleet in two minutes.

The three reimbursement methods compared

UK employers use three methods, often in combination: one for home, one for public charging.

Method A: actual cost, session by session

Actual cost means reimbursing exactly what the driver paid for the energy that went into the company car: kWh charged × the unit rate in force at that time on the driver's contract. It is the most accurate method and the only one that covers private miles at their real cost.

The difficulty is the tariff. UK EV drivers are increasingly on time-of-use tariffs:

• Standard variable or fixed tariff: one unit rate, for example 26.32p on the price cap.
• Economy 7: a cheaper night rate for seven hours, a dearer day rate.
• EV tariffs such as Octopus Go: a fixed cheap overnight window.
• Smart-charging tariffs such as Intelligent Octopus Go: the supplier schedules the charge in cheap slots, which can fall outside the usual night window (Octopus Energy).
• Agile: a half-hourly price that follows the wholesale market and can go negative.

A flat "average" price per kWh overpays the driver on an EV tariff and underpays the one on a standard tariff. The right way is to value each session at the rate of its half hour. Our guide to EV tariffs and off-peak charging shows how much that changes the bill.

To measure the car's kWh, you have three options: a smart home charger that logs sessions, a manual monthly reading, or the car's own data. Voltaback relies on the home's MID-certified meter, not on a standalone cable meter, and reads each charging session from the car itself, so no hardware is installed and the kWh are tied to one vehicle.

Method B: the Advisory Electricity Rate per mile

HMRC publishes advisory rates for fully electric company cars. From 1 September 2026 they are 7p per mile for home charging and 15p per mile for public charging. HMRC assumes 3.59 miles per kWh and reviews the rates every quarter, on 1 March, 1 June, 1 September and 1 December. Source: GOV.UK advisory fuel rates (updated 21 August 2026).

The AER is built for business mileage. Paid at or below the rate, HMRC accepts there is no profit element. To use it properly you need two pieces of data per journey: business or private, and where the energy came from. When a journey is powered partly by home and partly by public charging, GOV.UK allows you to apportion the mileage "fair and reasonable" by the share of charging at each place.

Its strength is simplicity: no tariff to collect, no meter. Its weakness is fairness. At 0.32 kWh per mile, 7p per mile is worth about 21.8p per kWh. A driver on an EV tariff at 8.9p earns about 4.2p per mile on top of their costs; a driver on a standard tariff at 26.32p loses about 1.4p per mile. At HMRC's own 3.59 miles per kWh, the break-even rises to about 25p. Our detailed guide to HMRC electric car mileage rates covers the AER in depth.

Method C: a company charge card for public charging

A charge card from a fuel card or roaming provider lets the driver pay at public chargers on the company's account. For a company car, there is no taxable benefit (section 239(4) ITEPA 2003, EIM23900), and nothing needs reimbursing.

The risk is cost, not tax: at 54p to 79p per kWh, a card used for routine top-ups near home doubles or triples the energy bill. Most policies allow the card for journeys only and keep home as the default.

Expense claims: the fallback

Drivers can still claim electricity through ordinary expenses, with their own estimate of the kWh. It is legal but it is where errors and disputes come from: estimates from the whole household bill, late claims, no link to the car. Our guide to EV charging expense claims covers what evidence holds up. A policy should make expense claims the exception.

Worked example: 50 company EVs, actual cost versus AER

Assumptions: 50 company cars, 12,000 miles a year each, 0.32 kWh per mile, so 3,840 kWh per car, all charged at home. Half the drivers are on an EV tariff (8.9p per kWh), half on the standard price cap (26.32p). Two versions of the AER are shown: paid on all miles, and paid on business miles only, assuming 60 % of mileage is business.

Our calculation from the Ofgem price cap, Zapmap and GOV.UK advisory fuel rates.

How to read it:

• Actual cost is the only neutral option. Nobody gains, nobody loses, and the company pays the real energy bill of its own cars.
• The AER on all miles is generous to off-peak drivers and costs this fleet about £8,000 more than the energy is worth. Some employers accept that as an incentive: with a fixed rate per mile, the driver keeps the difference, so they charge overnight on the cheapest tariff.
• The AER on business miles only looks cheaper, but it pushes the cost of private miles onto drivers on standard tariffs, the ones most likely to complain or to switch to the company card.

If your fleet has a high share of drivers on standard tariffs, actual cost is cheaper and fairer. If most drivers are already on EV tariffs and you value simplicity, a per-mile rate can work, provided you have reliable business mileage. Either way, decide with your own numbers, not the averages above.

How to set up reimbursement: the 5-step plan

1. Write the EV charging policy

The policy is the document drivers read, and the one HMRC or an auditor will ask for. Keep it to a few pages:

• Scope: which vehicles (company cars, salary sacrifice cars, pool cars, vans), and from what date.
• Default charging location: home first, public for journeys, workplace if you have it.
• Reimbursement method and rate: actual cost at the driver's tariff, or AER, and how often it is paid.
• Evidence: what data proves the kWh went into the company car.
• Public charging rules: when the charge card may be used, and what is not allowed (for example, charging a private second car).
• Changes: the driver tells you when they switch tariff or move house.

2. Choose the method, possibly by driver profile

Many fleets mix: actual cost for home, charge card for public. A fixed AER can suit drivers without data access, or as a transition while the measurement is rolled out. What you should avoid is a flat monthly allowance unrelated to consumption: it is taxable.

3. Secure the tax side

HMRC's test is simple: can you show the payment relates solely to the company car? A per-session record (date, kWh, vehicle, unit rate, amount) answers it. A share of the household bill does not.

Keep the records with your payroll records. GOV.UK asks employers to keep PAYE records for 3 years from the end of the tax year they relate to (GOV.UK, PAYE records). One point on VAT: the employer cannot reclaim VAT on electricity an employee buys at home for a company car, because the supply is made to the employee (HMRC VAT Notice 700/64, section 8.3). Do not build a VAT recovery into the business case.

4. Roll out without hardware

The fastest rollouts we see skip hardware entirely. Each driver connects the car once (about two minutes), sessions at home are detected automatically, and nothing is installed in the home. That also solves the cases a charger-based approach struggles with: drivers in flats, drivers who move, drivers who already own a charger of any brand, and drivers who use a 3-pin plug.

If you prefer to fund a smart charger for every driver, read our analysis of home chargers for fleet drivers first: the charger solves the charging, not the reimbursement.

5. Run it month by month

Pay monthly, through the same payroll run as salaries, with a separate non-taxable line. Track four indicators: home share of charging, average price paid per kWh, energy per mile by car, and claims in dispute. Check the AER every quarter if you use it.

Payroll: how the reimbursement goes through

An exempt reimbursement is not earnings. In practice:

• Pay it through payroll as a non-taxable expense payment, or through your expenses system. Either way, it is not subject to PAYE or NIC, provided it meets the conditions above.
• No P11D entry is needed for an exempt payment. From April 2027, employers must payroll most benefits in kind in real time (GOV.UK), but an exempt electricity reimbursement is not a benefit to report.
• If you pay above the real cost (for example an AER on all miles to a driver on a cheap tariff), the excess over the actual cost could be challenged as a profit. Paying at actual cost removes that question.
• Export, do not retype. A monthly file with one line per driver, ready to import into your payroll software, removes manual entry errors.

EV charging policy checklist

Use this list to review your policy before rollout:

1. Which vehicles are covered: battery electric, plug-in hybrids, salary sacrifice cars, vans?
2. Is the reimbursement tied to the company car's own kWh, not the household bill?
3. Which unit rate is used: the driver's actual time-of-use rate, or an average?
4. What happens with home solar panels or a home battery?
5. How often are drivers paid, and by what date each month?
6. When may the company charge card be used, and is home charging the default?
7. What is expected of plug-in hybrid drivers (charging at least a stated share of miles)?
8. What happens when a driver changes tariff, moves house or leaves the company?
9. Who can see which data, and for how long is it kept?
10. Who handles disputes, and within what time?

On point 7: a plug-in hybrid that is rarely charged burns petrol on every trip. Measuring home charging is the simplest way to know whether the PHEVs on your fleet are charged at all.

On point 9: home charging data is personal data under UK GDPR. Collect only what you need for the reimbursement. With Voltaback, the company never receives the drivers' geolocation, only the sessions, kWh and amounts.

The mistakes that cause disputes

• Reimbursing from the household bill. It fails HMRC's "solely for the company car" condition and penalises households with high usage.
• One average rate for everyone. It pays too much to off-peak drivers and too little to the rest, and both groups notice.
• Annual or quarterly payments. The driver advances hundreds of pounds; monthly is the norm.
• No rule on the charge card. Routine public top-ups near home triple the cost per mile.
• Forgetting plug-in hybrids. They are the vehicles where charging behaviour changes the fuel bill most.
• Ignoring tariff changes. Drivers switch suppliers and tariffs; the reimbursement must follow.

For the driver's side of the same rules, share our guide to charging your company car at home with your team.

What Voltaback automates

Voltaback is a software platform that measures and reimburses the home charging of company EVs, with no hardware:

• Measurement from the car: each home session, its kWh and its time, across more than 48 car brands, with no charger or box to install.
• Valuation at the driver's real tariff, including time-of-use and half-hourly tariffs, or at the HMRC AER if you prefer a per-mile rate.
• A record per vehicle and per session, which is the evidence HMRC's "solely for the company car" condition calls for. Our measurement is audited by an independent third party, with a 1.22 % average relative error.
• A monthly export ready to import into your payroll software.
• Privacy by design: ISO 27001 certified and UK GDPR compliant; the company never receives drivers' locations.

More than 200 companies, including major European groups, use it. See how home charging reimbursement works.

Next step: reimburse every kWh at its real cost

Home charging is the cheapest energy your fleet will ever buy, and the UK rules let you pay for all of it tax-free. What it needs is a clear policy and a per-session record. Talk to our team to see the reimbursement running on your own fleet, or run the home charging cost simulator first.