HMRC clarifies VAT position on electric vehicle recharging

HMRC has confirmed that VAT is chargeable at the standard rate for electric vehicles when using charging points situated in public places

Supplies of electric vehicle charging through charging points in public places are charged at the standard rate of VAT. There is no exemption or relief that reduces the rate of VAT charged. It also explains when input tax can be recovered for charging electric vehicles for business purposes.

There is a reduced rate of VAT for supplies of small quantities of electricity, known as ‘de minimis’. The de minimis provision only applies if the supply of electricity is all of the following:

• ongoing;
• to a person’s house or building; and
• less than 1,000 kilowatt hours a month.

The de minimis provision does not apply to supplies of electric vehicle charging at charging points in public places. This is because these supplies are made at various places such as car parks, petrol stations and on-street parking, not to a person’s house or building. In addition, these supplies are not usually an ongoing supply to one person where the rate of supply can be calculated.

Input tax is recoverable for charging electric vehicles 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.

Users needs to work out how much of the charge is for business use and how much is for private use. VAT can only be recovered for the business use amount. The usual input tax rules apply.

As a sole proprietor, the input tax can be recovered for charging an electric vehicle for business use at other places.

However, if a business user recharges the electric vehicle at home, VAT cannot be reclaimed as the supply is made to the employee and not to the business.

There are different rules when employees charge 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 they can work out the amounts of business use and private use for the vehicle.

When recharged at a business the full amount of VAT for the supply of electricity used to charge the electric vehicle can be reclaimed. This includes the electricity for private use. However, you will be liable for an output tax charge on the amount for private use. This is because a ‘deemed supply’ has been made. Alternatively, VAT can be recovered on only the business element.

The rate for recovery of input tax for charging electric vehicles is the same as the VAT rate charged on the supply of electricity, which is 20% for business use and 5% for domestic use.