VAT and Electric Vehicles
HMRC have just published Revenue and Customs Brief (RCB) 7/2021. The RCB provides confirmation of the rate of VAT on charging an electric vehicle (EV) at a public charging station and also the circumstances in which VAT can be recovered on the cost of charging an EV.
Rate of VAT
HMRC have confirmed that 20% VAT is due on the cost of charging an EV at a public charging station. The RCB provides details of the circumstances in which the 5% reduced rate of VAT can be charged, which for most users will be restricted to a home charging point.
Input tax recovery
In HMRC’s opinion, a sole trader will be the only person able to recover an element of VAT on home charging costs. The sole trader will be required to apportion the costs incurred by reference to detailed business mileage records. Using the same rationale, a sole trader can also recover VAT incurred at public charging points.
If an employee charges an EV at home, HMRC will not permit any recovery on the grounds that the supply is to the employee, not the employer. However, if an employee uses a charging point at the employer’s business premises this VAT can be recovered, subject again to the retention of business mileage records.