While VAT is generally not recoverable on the purchase of company cars, there are a number of company car tax incentives for businesses transitioning to electric vehicles.
In certain circumstances, businesses can recover some or all of the VAT on leasing, repairing and charging company electric vehicles.
Recovering VAT when buying or leasing electric vehicles (or ‘EVs’)
The current guidance from HMRC is that VAT is generally not recoverable on the purchase of EVs.
There are limited exceptions, including if the EV will be used exclusively for the purposes of your business and not for private use. As most businesses allow personal use by employees, it's expected that the majority of businesses will not be able to make use of this exception.
The guidance is different if you are leasing, rather than purchasing your business EVs. If you lease a ‘qualifying car’ for your business, subject to normal VAT rules, HMRC says that you can claim back at least half of the VAT on the lease payments for the EV.
We recommend that you contact your leasing company to confirm the VAT position before you sign a lease.
Recovering VAT for repairing and maintaining EVs
If your business pays for the repairs and maintenance of its business EVs, and the EVs are used for business purposes, the current HMRC guidance is that the VAT you are charged is recoverable as input tax.
Recovering VAT for charging EVs
If your business EVs are charged at a public charge point, subject to the normal rules, you can recover the VAT on charging for business use.
Allstar One Electric provides access to one of the UK's fastest roaming network dedicated to businesses and makes it easier for businesses to claim back VAT when charging in public.
If your business EVs are charged at work, HMRC’s guidance states that you can either:
Reclaim VAT on the business use only
Reclaim VAT on both personal and business use, but the business would be liable for output tax charges on any private use.
If you are a sole proprietor or a partner in a partnership business, HMRC’s guidance confirms that you can recover the VAT on charging your EV at home when the EV is being charged for business use.
In all circumstances, you should keep full and accurate records of how much of the charging relates to business use and how much relates to private use.
In circumstances where employees can charge at home, 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”.
Get ahead of the curve and join those business making the switch to electric with our simple EV charging solutions.
Notice
The information provided on this website is for general informational purposes only. It is based upon our understanding of the guidance at the time of publication and it is not a substitute for legal or tax advice based on your own circumstances.
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