R & C Brief 7 (2021): VAT liability of charging electric vehicles

HMRC have published Revenue & Customs Brief 7 (2021): 'VAT liability of charging electric vehicles’ which explains the VAT treatment of using charging points in public places and when associated input VAT can be recovered by businesses.

VAT liability of charging

• The supply of electric vehicle charging via a charging point in a public place is subject to VAT at the standard (20%) rate.
• The reduced (5%) rate of VAT does not apply to supplies of electric vehicle charging at charging points in public places.
• • The reduced rate only applies to ongoing supplies of electricity to a person’s house or building which is less than 1,000 kilowatt-hours a month.
  • Supplies made at places such as car parks, petrol stations and on-street parking are not made to a person’s house or building and are not usually an ongoing supply to one person where the rate of supply can be calculated.

Recovering input VAT on vehicle charging: sole proprietors

• Input VAT incurred when charging an electric vehicle can be recovered where you:
  • Are a sole proprietor.
  • Charge your electric vehicle at home.
  • Charge your electric vehicle for business purposes.
• VAT can only be recovered to the extent that charging the electric vehicle is for business use.
• Sole proprietors can also recover the input VAT incurred in charging their electric vehicle for business use at other places such as car parks and service stations.
• VAT may be recovered at the same rate that it is charged on the supply of electricity.

Recovering input VAT on vehicle charging: employees

• Where employees charge an electric vehicle at home, which is used for business, the VAT is not recoverable.
  • The supply is made to the employee and not the business.
• Where employees charge an Employer’s electric vehicle used for both business and private purposes at the employer’s premises, the employees must keep a record of their business and private mileage to work out the proportion of business use for the vehicle.
  • The full amount of VAT charged on the supply of electricity used to charge the electric vehicle can be recovered, including private use.
    • An output VAT charge will arise on the amount for private use: this is a deemed supply.
  • Alternatively, VAT recovery can be restricted to the business element.

In all cases, the usual input VAT recovery rules apply. This may include adjustments for Partial exemption.

Useful guides on this topic

Private use of goods: VAT and Lennartz
What is the Lennartz mechanism? How does the Lennartz mechanism assist businesses in accounting for the VAT effect of the non-business use of goods? 

Company cars
Company car tax: How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low-emissions vehicles? How do you reduce car benefit? Cars and the tax tribunals and Top Tax Tips.

Cars & Vans: VAT
What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements? 

Vehicles (4 wheels): Allowances
What capital allowances are available for vehicles? How does HMRC classify what is a car or what is a van? 

Enhanced Capital Allowances: Energy saving plant
What are Enhanced Capital Allowances (ECAs)? What is energy-saving plant and machinery? What allowances are available?  

Partial exemption & input VAT
How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?

External link

HMRC: Revenue & Customs Brief 7 (2021): 'VAT liability of charging electric vehicles’