Environment Tax

VAT Recovery on EV Charging costs – “Range Anxiety” continues


Anyone who’s made the switch to an Electric Vehicle (EV) will be familiar with that phrase “range anxiety” – as you watch the battery charge diminish and wonder if you’ll make your destination or at least your next charging point! HMRC seem to still have a similar anxiety with the “range” of VAT recovery entitlement they are comfortable to allow businesses on the recharging costs an employee will incur when charging their EV at home.

As often is the case there is a legal accuracy to their position – the provision of electricity to someone’s home is a supply made by the energy company to the householder not the business. However, clearly when that vehicle is used to support the business activities of the employer is there not also a legitimate claim to be made by the employer to the VAT incurred on the domestic electricity supply?

HMRC have no hesitation to allowing VAT recovery on the petrol element of a mileage allowance paid to an employee – supported by the valid petrol receipts provided by the employee. Hence, an inequity in treatment exists which is at odds with an encouragement for business or indeed employees to take up EV’s.

HMRC have updated their Public Notice 700/64 Motoring Expenses in January 2022 to indicate that the position of VAT recovery on home recharging is still under review:

“8.4 HMRC review

8.4.1 Electricity paid for by employees

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.

This is to determine what evidence can be practicably provided, to allow the employer to claim the related VAT, subject to the normal rules.

8.4.2 Simplification measures

HMRC are also considering other simplification measures that may reduce administrative burdens in terms of accounting for VAT on private use.”

Perhaps we can expect an announcement in the Spring Statement on the 23 March 2022! Fingers crossed then.

To ensure your organisation achieves the fullest VAT recovery it is entitled to – whatever your organisation is engaged in – do get in touch with your Centurion VAT specialist team – always here to help on the VAT front – use emailus@centurionvat.com or call on 0330 124 07740


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