HMRC has reconfirmed that supplies of electricity for charging electric vehicles (EVs) at public EV charging points is standard-rated for VAT purposes.
Electricity supplied at public EV charging points is subject to VAT at the standard rate of 20%, rather than the reduced 5% domestic rate that often applies to home charging.
The clarification continues to create complications for businesses and employees reclaiming VAT on electric vehicle costs, particularly where vehicles are charged away from home.
The tax landscape for EVs is gradually becoming less generous. The company car benefit-in-kind (BIK) rate for EVs increased to 4% this year and is set to rise annually, reaching 9% by 2029-30. In addition, electric vehicles are now being brought into the Vehicle Excise Duty (VED) regime through the introduction of EVED charges.
Despite these changes, EVs remain far more tax-efficient than petrol or diesel alternatives for companies and owner-managed businesses. Even with rising BIK percentages, the tax cost for directors and employees using EV company cars is still dramatically lower than for traditionally fuelled vehicles. Combined with lower running costs and favourable capital allowances, EVs continue to represent one of the most attractive company car options currently available.
If you are considering purchasing a car through your limited company, speak to us about the tax implications and potential tax savings.
