Recently there has been an uptake in the purchase and lease of electric vehicles. Many manufacturers have also committed to producing only electric vehicles from a certain date in the future.
As governments and organisations try and tackle climate change, the change in the cars we drive is a matter for the present as well as the future. This blog aims to cover some of the tax considerations on electric vehicle charging points.
VAT Rate Charged
Supplies of domestic electricity is subject to VAT at 5%. Supplying electricity for charging of a vehicle via a charging point in a public place however is subject to 20% VAT.
The 5% rate will apply where the supply is to someone’s house or building which is less than 1,000 kw hours a month.
Installation costs of charging points
The costs of installing the charging points are deductible against business profits in full. If the expenditure is on charging facilities that are new (not second hand), then they are likely to qualify for the super deduction where 130% of the cost attracts tax relief.
Limited company directors and employees
If you’re a director/employee and charge an electric vehicle, which is used for business at your home, you cannot claim the VAT. This is because the supply of electricity will have been made to the individual not the business.
Sole Traders
If you are a sole trader and use an electric vehicle, you can claim back any VAT on charging costs on the business portion of use. VAT incurred charging your electric vehicle for business use at public places can also be claimed. Where you charge a company electric vehicle used for both business and private purposes at your business premises you must keep a record of the split between business and private mileage. Two methods can then be used to reclaim the VAT.
- reclaim the VAT relating to business portion use or
- reclaim all the VAT and include a scale on the VAT return which reflects private use
