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Business Services  •  Business Tax  •  Taxation

New guidance on VAT reclaims for electric vehicle charging costs

By RJP LLP on 17 January 2022

Electric cars are more popular than ever thanks to all the tax breaks available. It used to be the case that reclaiming the costs of charging electric cars used for business purposes was rather complex and there were a number of exclusions.

It is still relatively complex however HMRC has recently clarified its guidance on VAT reclaims for electricity costs when charging electric vehicles. Here are the latest guidelines and scenarios where VAT reclaims are allowable.

Charging electric vehicles at the workplace

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

Business owners charging EVs at home

Sole proprietors or a partner in a partnership business with an electric vehicle can recover the VAT component on costs for charging electric vehicles at home, provided the electric vehicle is charged for business purposes only.

If you qualify for a VAT rebate on this basis, it is necessary to calculate 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. Normal input tax rules then apply.

Employees charging EVs at work

If an employee charges an electric vehicle (this can be a company or private vehicle) at a public charging point at their business location, the supply of electricity is made to the company or employer. This means the employer can recover the VAT on the cost of charging the electric vehicle, subject to the normal rules. It is important to keep detailed mileage records, to be able to work out how much of the charging cost was used for business and how much related to private use.

Employees charging EVs at home

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.

This means the employer is not entitled to recover the VAT on the cost of charging the electric vehicle, even if the employee is reimbursed for these costs as business related expenses.

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

We will update you on any changes as and when further guidance is made available.

If you wish to discuss any aspect of tax planning in relation to electric vehicles please contact us via partners@rjp.co.uk

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Electric cars are more popular than ever thanks to all the tax breaks available. It used to be the case that reclaiming the costs of charging electric cars used for business purposes was rather complex and there were a number of exclusions.

It is still relatively complex however HMRC has recently clarified its guidance on VAT reclaims for electricity costs when charging electric vehicles. Here are the latest guidelines and scenarios where VAT reclaims are allowable.

Charging electric vehicles at the workplace

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

Business owners charging EVs at home

Sole proprietors or a partner in a partnership business with an electric vehicle can recover the VAT component on costs for charging electric vehicles at home, provided the electric vehicle is charged for business purposes only.

If you qualify for a VAT rebate on this basis, it is necessary to calculate 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. Normal input tax rules then apply.

Employees charging EVs at work

If an employee charges an electric vehicle (this can be a company or private vehicle) at a public charging point at their business location, the supply of electricity is made to the company or employer. This means the employer can recover the VAT on the cost of charging the electric vehicle, subject to the normal rules. It is important to keep detailed mileage records, to be able to work out how much of the charging cost was used for business and how much related to private use.

Employees charging EVs at home

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.

This means the employer is not entitled to recover the VAT on the cost of charging the electric vehicle, even if the employee is reimbursed for these costs as business related expenses.

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

We will update you on any changes as and when further guidance is made available.

If you wish to discuss any aspect of tax planning in relation to electric vehicles please contact us via partners@rjp.co.uk