What are the rules for claiming VAT on charging electric vehicles?

Following the publication of Revenue & Customs Brief 7(2021), HMRC have received a number of representations about the limited options for reclaiming VAT on the cost of charging electric vehicles.

The latest Brief (1/2022) explains that HMRC is now reviewing the situation where an employee is reimbursed by the employer for the actual cost of electricity used in charging an electric vehicle for business purposes.  

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

Are there any changes for VAT when the vehicle is used for private use? 

HMRC is also considering other simplification measures that may reduce administrative burdens in terms of accounting for VAT on private use of electric vehicles. 

Once the review is complete, HMRC will publish guidance to confirm its policy and provide information to businesses. 

What are the current rules on charging electric cars?

HMRC have updated section 8 of VAT Notice 700/64 (Motoring Expenses) covering the recovery of input tax incurred by businesses regarding the charging of electric cars.

In summary, the current rules relating to charging electric vehicles and claiming input tax are as follows:

VAT can be claimed as input tax when charging at a public or at work

Where businesses charge electric vehicles at work or a public charging place and the electricity is put to business use, the VAT can be claimed as input tax.

Sole traders & partnerships can recover VAT if charged at home

Sole traders and partners are able to recover the VAT incurred on the cost of charging an electric vehicle if the vehicle is charged at home.

Public charging points can be used to recover input tax if used by an employee

If an employee charges an electric vehicle at a public charging point, the supply is treated as made to the employer and the VAT can be recovered as input tax subject to the normal rules.

Working from home means that there is no VAT recovery

Currently, there is no VAT recovery for employees charging electric vehicles at home. 

Mileage records need to be updated regularly

Mileage records should be kept to calculate the business and private use.