Last week the HMRC clarified that the standard rate of VAT will apply to EV charging through charge points in public places. It has also explained when input tax can be recovered for charging EVs for business purposes.
With more and more businesses seeing the benefit in making the switch to EV and with many employees charging their vehicles while on the road, at home and at the office the use of electric vehicle charging points is becoming more common in public places.
The HMRC has answered the requests from businesses to clarify the rules in specific cases, and in particular to confirm when input tax can be recovered when charging electric vehicles for business purposes.
They key information from this latest brief:
- If 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.
- For employees charging an employer’s electric vehicle (for both business and private use) at the employer’s premises, the employee needs to keep a record of their business and private mileage so that the business can work out the amounts of business use and private use for the vehicle.
- Businesses can recover VAT only on the business element. The usual input tax rules apply.
- The HMRC’s policy on petrol/diesel is unchanged. It is still the case that VAT recovery is allowed when an employee fills up their car and is reimbursed by their employer.
HMRC says that it is possible to recover the input tax for charging an EV as an individual if all of the following apply: you are a sole proprietor; you charge your electric vehicle at home; and you charge your electric vehicle for business purposes.
The advice being given by the HMRC is that businesses should work out how much of charging is for business use and how much is for private use by asking employees to keep records and report usage. VAT is recoverable only on the business use amount. The usual input tax rules apply.
More information and resources:
- For the brief provided by the HMRC, more detailed information can be found here.
- You can check if your business will need to pay tax for charging an employee’s electric car here.
- If business and employees’ vehicles are hybrid vehicles you can access the HMRC’s company car and fuel benefit calculator to help determine the required tax. Access the calculator here and select fuel type ‘A’.
Any business, charity, or public sector organisation with a Companies House reference number can apply for the Workplace Charging Scheme, or WCS grant if they can declare a need for electric car charging equipment, or an intent to encourage EV use among their staff or fleet.
The WCS can provide financial support towards the up-front costs of buying and installing electric car chargers for many businesses, charities and public sector organisations.
Find out more here.
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