Refund for VAT registered
Electric Vehicle owners

Owning an electric vehicle is good for the environment AND your VAT bill

Although the number of electric vehicle owners is still relatively small, if you make the investment there are many positives to owning an Electric Vehicle:

  • No London Congestion Charge for fully electric vehicles
  • Cheaper running costs
  • Low maintenance costs
  • Reduced pollution
  • Home charging
  • Reduced noise while driving

However, aside from the environmental positives, there’s now also a VAT benefit

Recovering input tax for charging electric vehicles

You can recover input tax for charging your electric vehicle if you can answer ‘yes’ to all of the following:

  • you are a sole proprietor
  • you charge your electric vehicle at home
  • you charge your electric vehicle for business purposes

So, what’s next? Well now you need to work out how much of charging your electric vehicle is for business use and how much is for private use. Unfortunately HMRC have made this part a little tricky, as they haven’t indicated how this should be done!

What we do know is that the rate for recovery of input tax for charging electric vehicles is the same as the VAT rate charged on the supply of electricity.

Why is the government offering this incentive?

The UK government has set an ambitious target to reduce emissions by 78% by 2035.

The ‘Carbon Budget‘ will ensure Britain remains on track to end its contribution to climate change, while remaining consistent with the Paris Agreement temperature goal to limit global warming to below 2°C.

By offering incentives such as the input tax recovery scheme, they hope to increase the use of electric vehicles over petrol and diesel.

Need Help?

We are Cottons London, small business accountants and branch of top 100 firm Cottons Chartered Accountants. We specialise in support for small businesses and freelancers in London.

If you would like help with this, or anything else with regards tax, accounting or business planning, please contact us today to set up a meeting; we can accommodate remote meetings where required.

Need more support?

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