VAT liability for electric vehicle charging through charging points in public places

HMRC have recently issued guidance on the VAT treatment of the provision of electric vehicle charging points.

They have confirmed that supplies of electric vehicle charging through charging points in public places should be charged at the standard rate of VAT. There is no exemption or relief that reduces the rate of VAT charged.

Recovering input tax for charging electric vehicles

• VAT can be reclaimed on charging an electric vehicle if all of the following apply:
• you are a sole proprietor
• you charge your electric vehicle at home
• you charge your electric vehicle for business purposes

A sole proprietor must calculate how much of the vehicle charging is for business use and how much is for private use. VAT can only be reclaimed on the business use amount. The usual input tax rules apply, e.g. a VAT invoice must be held.

Sole proprietors can recover the input tax for charging your electric vehicle for business use at other places. The rate for recovery of input tax for charging electric vehicles is the same as the VAT rate charged on the supply of electricity. Again the usual input tax rules apply and an adjustment should be made for private use.

Employees charging an electric vehicle (which is used for business) at home

VAT cannot be recovered because the supply is made to the employee and not to the business.

Employees charging an employer’s electric vehicle (for both business and private use) at the employer’s premises

The employee must keep a record of their business and private mileage and calculate the amount of business use and private use for the vehicle.

You can recover the full amount of VAT for the supply of electricity used to charge the electric vehicle. This includes the electricity for private use. However VAT will be payable on the electricity relating to the private use.

Alternatively the VAT reclaim can be restricted to the business element only. The usual input tax rules apply.

Summary

Whilst this clarification is welcomed, for a small business owner running a Limited Company from home, no VAT recovery will be available for electricity used to charge a vehicle for business journeys, as this would fall under the category of “employees charging an electric vehicle at home”.

If you have any queries on this, please contact me or your usual Albert Goodman contact.