Can you claim input tax on costs linked to electric cars?

Buying the car

There is no difference in the input tax rules for petrol, hybrid, diesel or electric cars. It is all about your use and intended use of the vehicle that counts and not how it is powered.

If your vehicle will be wholly used for business purposes and is not intended to be made available for private use, then input tax can be fully claimed. Input tax can also be claimed if a vehicle will be used as tool of trade, e.g. a taxi, driving school or car hire business. HMRC’s guidance is in VAT Notice 700/64 .

Input tax can be claimed in the case of genuine pool cars that are available for use by a range of employees and are not kept overnight at the home of a business owner or member of staff.

If you claim input tax on a car, you must charge VAT and declare output tax when you sell it.

Charging vehicles

You can only claim input tax if your employees charge their company vehicles at your business premises or a public charging point. However, an apportionment is needed for any private use, so they must provide you with details of their business and private mileage.

Instead of apportioning input tax on the purchase of the electricity, your business can fully claim input tax and then account for output tax on private journeys carried out by your employees, based on their mileage log. It makes sense to use HMRC’s advisory fuel rates for fully electric cars.

What’s changed?

Until 31 August 2025, HMRC only had a single advisory rate of 7p per mile for electric cars, i.e. this rate would be used to claim input tax for employees using company cars and submitting mileage claims or accounting for output tax on private trips. From 1 September 2025, this was changed to a two-rate system. The rates from 1 December are:

• public charging rate - 14p per mile; and
• home charging rate - 7p per mile.

A significant reason for the lower home rate is because VAT is only charged at 5% rather than 20% on domestic fuel bills.

As input tax cannot be claimed on home charging costs carried out by your employees, on the basis that the supply is being made to the employee and not your business, the home charging rate is only relevant to calculate how much output tax is declared on private trips. It is also relevant to direct tax.

Example. John has a company car and does alternate charges at home and a local supermarket. His employer pays him 7p per mile for home charges and 14p per mile for public charges, claiming input tax on the public charges only, i.e. 14p x 1/6 input tax per mile, with the claim supported by VAT invoice from the suppliers at the public charging points. For private trips, it would be fair as a practical solution for output tax to be based on a rate of 14p but only apply it to 50% of the total private mileage, i.e. to reflect the dual charging outcome.

Hybrid cars are treated in the same way as either petrol or diesel cars, and input tax claims should be followed in accordance with section 8 VAT Notice 700/64.