Update Jan 6, 2022: Information about electricity for charging electricity vehicles has been added
How to account for VAT on vehicles and fuel you use for your business.
Section added
8. Electricity for charging electric vehicles
8.1 Who can reclaim input tax
VAT incurred by businesses when charging electric vehicles can be recovered on the business use of those vehicles, where the vehicles are charged at work or at public charging premises.
You can also recover the VAT for charging your electric vehicle if you’re a sole proprietor or a partner in a partnership business, and you charge your electric vehicle for business purposes at home.
You should calculate how much of the cost of charging your electric vehicle is for business use and how much is for private use by keeping mileage records. The normal input tax rules then apply.
8.2 Employees charging an electric vehicle which is used for business at a public charging point
If an employee charges an electric vehicle (whether this is a company vehicle or not) at a public charging point, the supply of electricity is made to the company or employer. They can recover the VAT on the cost of charging the electric vehicle, subject to the normal rules.
The employer must keep detailed mileage records to work out how much of the charging cost is used for business and private purposes where applicable.
8.3 Employees charging an electric vehicle which is used for business at home
Where an employee charges an electric vehicle (whether this is a company vehicle or not) at home, the overall supply of electricity is made to the employee and not the employer.
The employer is not entitled to recover the VAT on the cost of charging the electric vehicle.
8.4 HMRC review
8.4.1 Electricity paid for by employees
HMRC is considering 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 practicably provided, to allow the employer to claim the related VAT, subject to the normal rules.
8.4.2 Simplification measures
HMRC are also considering other simplification measures that may reduce administrative burdens in terms of accounting for VAT on private use.
Source gov.uk
