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VAT Reclaims for Charging Electric Vehicles

HMRC have updated the rules on VAT reclaims for charging electric vehicles, however how employees can make claims for domestic charging is still under review.

VAT incurred by businesses when charging electric vehicles can be recovered on the business use of those vehicles, where the vehicles are charged at work or at public charging premises.

It is also possible for sole traders or a partner in a partnership business to recover the VAT for charging electric vehicles when an electric vehicle is charged for business purposes at home.

Calculations on how much of the cost of charging the electric vehicle is for business use and how much is for private use by keeping mileage records. The normal input tax rules then apply.

If an employee charges an electric vehicle (whether this is a company vehicle or not) at a public charging point, the supply of electricity is made to the company or employer. They can recover the VAT on the cost of charging the electric vehicle, subject to the normal rules.

The employer must keep detailed mileage records to work out how much of the charging cost is used for business and private purposes where applicable.

Where an employee charges an electric vehicle (whether this is a company vehicle or not) at home, the overall supply of electricity is made to the employee and not the employer.

The employer is not entitled to recover the VAT on the cost of charging the electric vehicle.

HMRC is reviewing the situation where an employee is reimbursed by the employer for the actual cost of electricity used in charging electric vehicles at home for business purposes.

This is to determine what evidence can be practicably provided, to allow the employer to claim the related VAT, subject to the normal rules.

For further guidance on tax implications of electric vehicles contact AJR & Co Ltd.