Please find below a summary of HMRC’s latest policy announcement regarding the VAT treatment of charging of electric vehicles.
The update clarifies that the standard rate of VAT applies to supplies of electric vehicle charging through charging points in public places. It also explains when input tax can be recovered for charging electric vehicles for business purposes.
VAT liability for electric vehicle charging through charging points in public places
Supplies of electric vehicle charging through charging points in public places are charged at the standard rate of VAT. There is no exemption or relief that reduces the rate of VAT charged.
Recovering input tax for charging electric vehicles
You can recover the input tax for charging your electric vehicle if all of the following apply:
- you are a sole proprietor
- you charge your electric vehicle at home
- you charge your electric vehicle for business purposes
You should work out how much of charging your electric vehicle is for business use and how much is for private use. You can recover VAT on only the business use amount. The usual input tax rules apply.
As a sole proprietor, you can recover the input tax for charging your electric vehicle for business use at other places. The usual input tax rules apply.
The rate for recovery of input tax for charging electric vehicles is the same as the VAT rate charged on the supply of electricity.
Employees charge an electric vehicle (which is used for business) at home
You cannot recover the VAT. This is because the supply is made to the employee and not to the business.
Employees charge an employer’s electric vehicle (for both business and private use) at the employer’s premises
Your employee needs to keep a record of their business and private mileage so that you can work out the amounts of business use and private use for the vehicle.
You can recover the full amount of VAT for the supply of electricity used to charge the electric vehicle. This includes the electricity for private use. However, you will be liable for an output tax charge on the amount for private use. This is because a ‘deemed supply’ has been made. Alternatively, you can recover VAT on only the business element. The usual input tax rules apply.
Fur further details, please visit: https://www.gov.uk/government/publications/revenue-and-customs-brief-7-2021-vat-liability-of-charging-of-electric-vehicles/revenue-and-customs-brief-7-2021-vat-liability-of-charging-of-electric-vehicles
