The problem with the AER is that it massively undercompensates drivers as soon as they leave their home driveway. A driver doing as little as 20 percent of their charging in public can be faced with a gap of £200 or more for their annual cost to drive business miles. Higher mileage drivers and those who charge away from home are most effected.
A Polestar 2 driver doing 6,000 business miles a year, charging mainly in public stands to be out of pocket by £800 every year. And a Jaguar iPace doing 10,000 miles for business all in public stands to be out of pocket by in excess of £2,000
Some businesses chose to address this with an additional payment to the driver. This additional payment needs to be “grossed up” in order to be compliant. This means adding extra PAYE tax and income tax to the amount which is an additional fiddle for the business. Businesses who do not do this are not compliant and risk HMRC penalties of tens of thousands of pounds.
Or a business can choose to just pay for the charging. However, with no record of what business miles the driver does this is a benefit in kind and without recording it as such the business is again not tax compliant.
To help tackle this challenge Paua has released a simple calculator to enable drivers to understand how much out of pocket they are. Inputting data around their vehicle, their mileage and energy costs provides the drivers with a snapshot of the impact that this has on them.
Paua is urging drivers who feel that they may be affected by this to reach out so that the company can work with their employer to get them a better deal. Paua Reimburse has been developed to tackle this exact challenge. It captures the charging costs for home and public and splits the business and personal usage to help businesses fairly compensate their employees for the amount they actually spent on charging their vehicle for business use.
The data collected ensures that Paua can calculate a bespoke rate for the driver for their claim period.
“Paua makes it simple for business to properly compensate employees and be compliant with HMRC” said Niall Riddell, CEO at Paua. “Businesses are pushing drivers to adopt electric vehicles but without the right compensation mechanisms in place they risk underpaying their drivers for the business miles they complete. This can leave them in a sticky situation.”
Businesses who want to find out more can contact Paua directly for a consultation to review the best approach available to them.
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