When it comes to electric cars, one of the most significant advantages is their lower running costs. However, there may be some confusion as to what portion of the cost of charging an electric vehicle (EV) can be claimed as a business expense for tax purposes.
Here are some of the tax rules that apply to electric car charging costs:
Home charging
If you charge your electric car at home, you can claim the cost of the electricity used to charge your car as a business expense. However, you must be able to demonstrate that the charging is being done for business purposes. For example, if you use the car for both business and personal purposes, you will need to apportion the expense accordingly.
Workplace charging
If you install a charging point at your workplace, you can claim the full cost of installation and any ongoing maintenance as a business expense. However, you must be able to demonstrate that the charging is being done for business purposes.
Public charging
If you use public charging points, you can claim the cost of the electricity used as a business expense. However, you must be able to demonstrate that the charging is being done for business purposes.
VAT
If you are VAT registered, you can claim back the VAT on the cost of installing a charging point at your workplace or in a commercial property. Additionally, you can claim back the VAT on the cost of the electricity used to charge your electric car if it is for business purposes. However, if the charging is for personal use, you cannot claim back the VAT.
Benefit-in-kind tax
If you provide an electric car to an employee for their own use, they may be liable for benefit-in-kind (BIK) tax as a result. The amount of BIK tax payable depends on various factors, including the value of the car and the employee’s tax bracket. In tax years 2021/22 and 2022/23, drivers will pay 1% and 2%, respectively. Employees will not be liable for BIK tax on the electricity used to charge the car.
It’s important to keep accurate records of any electric car charging costs that you claim as a business expense, including the date, time, and cost of the charging session. This will provide evidence to support your claim in case of a tax audit.
If you’re unsure about any tax rules relating to electric car charging costs, it’s always best to seek advice from a qualified accountant or tax expert. They can advise you on the most tax-efficient ways of managing your electric car charging costs. At AYUB Chartered Accountants, our experienced team of accountants is here to help. Contact us today to learn more about how we can help you.