With more and more people purchasing electric cars, it’s safe to say they are on the rise, but what are the key considerations for tax on electric vehicle charging points? We’ll explore the topic in this blog post.
According to next greencar, there were nearly 300,000 pure-electric cars on UK roads at the end of May 2021, and more than 600,000 plug-in models – also including plug-in hybrids (PHEVs).
Therefore, it’s becoming increasingly more important to build awareness of the tax rules for electric vehicle charging points.
VAT considerations
HMRC recently published a brief about the VAT treatment of electric vehicle charging points in the UK. They can be summarised as follows:
Liability relating to tax on electric vehicle charging points
Charging and electric vehicle via a charging point in a public place has a VAT charge at the standard rate of 20%.
The reduced rate of 5% doesn’t apply to supplies of electric vehicle charging points in public places. It only applies to continuing supplies of electricity to a person’s house or a building, which is less than 1,000 kilowatt-hours a month.
VAT claims for sole traders
If you’re a sole trader, you can claim back VAT costs you have incurred whilst charging an electric vehicle. However, the VAT costs you claim, can only be those relating to business use of the electric vehicle.
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VAT recovery for directors and employees
You cannot claim VAT back if you’re a director/employee if you charge an electric vehicle which is used for business at your home. This is due to the fact that the supply of electricity will have been made to the individual and not the business.
You must keep a record of both your business and private mileage, even if you charge a company electric vehicle used for both business and private purposes at your business premises. This is necessary when working out the proportion of business use for the vehicle.
Installation costs
As a business, you can claim for installation costs of an electric vehicle charging point. This can include the cost for the charging point itself and any changes to land used to instal the charging point, it can also include any costs made for modifications to supply electricity to your charging point.
In addition to this, some of your expenditure may also qualify for the new super deduction, which equates to a 130% enhanced deduction of the total cost.
To be able to qualify for the super deduction, your expenditure must be on a new and unused electric vehicle charging facility, and not on any second-hand ones.
How can Relative help?
Are you considering investing in electric vehicles for your business? Are you struggling to understand all the different VAT regulations surrounding vehicle charging points?
We are fully aware of how difficult it can be to make the right choices for your business.
Therefore, whatever problem you may be experiencing, we are more than happy to support you in finding the best solution for you and your business.