VAT treatment of charging of electric vehicles

HMRC is reviewing how businesses reclaim VAT on the cost of charging electric vehicles.

HMRC’s VAT Brief 1 (2022) Reviewing how to claim VAT when charging electric vehicles for business purposes announces a review of how VAT is reclaimed on the cost of charging electric vehicles that are used for business purposes and how to account for VAT on any private use.

The review will focus on the following two points:

• evidence that will be required to enable an employer to claim the related VAT, where the employer reimburses an employee for the actual cost of electricity used in charging an electric vehicle for business purposes; and
• potential simplification measures to reduce the administrative burdens of accounting for VAT on private use.

HMRC has also added a new section 8 to its guidance Motoring expenses (VAT Notice 700/64) covering recovery of input tax incurred by businesses in relation to the charging of electric cars. The notice confirms HMRC’s intention to review the above two points.

Revenue and Customs Brief 7 (2021) VAT liability of charging of electric vehicles set out HMRC’s general view of the VAT treatment of supplies of electricity for charging vehicles and the input VAT recovery position.