November Questions and Answers

Newsletter issue - November 2023

Q. In June 2023, you said that it wasn't free of tax if the employer reimbursed an employee when recharging their electric car from home - but it is if we allow them to recharge at the workplace. We have a workplace EV charger and reimburse the employees who use their own at home. Have HMRC thought again on why the tax treatment differs?

A: Thankfully, HMRC have recognised (at last) they need to bring their guidance into line and make both charging at the workplace and at home free of tax. They have updated their Employment Income Manual (page 23900) to say this and there is a nice flowchart which confirms there is no tax due where an employer reimburses the employee for the cost of electricity to charge their company car at home. The same applies with National Insurance. Do make sure you keep records to demonstrate to HMRC you have only reimbursed for the charging of a company electric vehicle.

Q. We are a new company and looking to use the VAT Flat Rate Scheme from December 2023. Is this better than the 'normal' VAT for record keeping and VAT returns?

A: The Flat Rate Scheme is a simpler method of working out your VAT because you will be calculating a net tax amount without reference to output tax and input tax. In that regard, the Scheme is simpler for you.

But there are eligibility conditions and you need to apply to HMRC to use the Scheme and you can't operate it until after you have approval. It is not right for all businesses and we recommend speaking to you accountant, especially if you are in your first year as the flat rate percentage can be reduced by 1%.

Q. The Chancellor announced that the National Living Wage would rise to Â£11 per hour in 2024. Do we know all the other rates yet so we can plan?

A: Jeremy Hunt made the announcement at the Conservative Party Conference in October 2023 that the National Living Wage would increase to 'at least Â£11 an hour' from April 2024. This is not the exact value and you should not take any action. The rates are advised to the Government by the Low Pay Commission which the Government comments on at the Autumn Statement (in November 2023).

We don't have the full story yet I'm afraid but will bring it to you when we know.