HMRC has published a brief outlining the VAT policy for suppliers of electric vehicle charging points and motorists who charge up their vehicles for business purposes.
It says supplies of electric vehicle charging through charging points in public places are charged at the standard rate of VAT and there is no exemption or relief that reduces the rate of VAT charged.
This means the standard VAT rate of 20% will apply and motorists without their own chargers – who only pay 5% on household supplies – will now be paying an additional 15% VAT for every charge.
There is a reduced rate of VAT for supplies of small quantities of electricity, known as ‘de minimis’. The de minimis provision only applies if the supply of electricity is all of the following; ongoing; to a person’s house or building; and less than 1000 kilowatt hours a month.
The de minimis provision does not apply to supplies of electric vehicle charging at charging points in public places. This is because these supplies are made at various places such as car parks, petrol stations and on-street parking, not to a person’s house or building. In addition, these supplies are not usually an ongoing supply to one person where the rate of supply can be calculated.
HMRC has published this guidance as a result of electric vehicle charging points becoming more common in public places. It added that it has received requests from businesses and business representatives to clarify the rules in specific cases, and in particular to confirm if supplies of electric vehicle charging at charging points in public places should be charged at the reduced rate of VAT. It had also been asked to clarify when input tax can be recovered when charging electric vehicles for business purposes.
The guidance states that you can recover the input tax for charging your electric vehicle if all of the following apply; you are a sole proprietor; you charge your electric vehicle at home; and you charge your electric vehicle for business purposes.
It also states that employees that charge an electric vehicle which is used for business at home cannot recover the VAT.
For more information, view the HM Revenue and Customs policy paper here.