Can I claim VAT back on an electric car?

If you're buying an electric car for business use, you may be able to reclaim some VAT. Here's how it works.

The Short Answer

You can reclaim VAT on an electric car if:

It's used 100% for business purposes

OR you lease it (partial recovery possible)

You cannot reclaim VAT if:

There's any private use (purchase)

It's bought for an employee with private use

VAT on Purchasing an EV

100% Business Use (Rare)

If the car is used exclusively for business:

Full VAT recovery possible

Must demonstrate zero private use

Very difficult to prove in practice

HMRC scrutinises these claims

Examples that might qualify:

Pool car with strict usage policy

Driving school vehicle

Car kept at business premises only

Any Private Use (Most Cases)

If there's any private use (including commuting):

No VAT recovery on purchase

This applies to most business car purchases

Commuting counts as private use

Reality: Almost all car purchases have private use, so VAT recovery on purchased cars is rare.

VAT on Leasing an EV

The 50% Rule

When leasing a car with private use:

You can recover 50% of the VAT

This applies regardless of business/private split

Much better than purchase (0% recovery)

Example Calculation

Lease: £500/month + VAT

Element	Amount
Lease cost	£500
VAT (20%)	£100
VAT recoverable (50%)	£50
Net cost to business	£550

Annual VAT recovery: £600

100% Business Use Leasing

If leased car has no private use:

100% VAT recovery on lease

Must prove exclusive business use

Same strict requirements as purchase

VAT on EV Charging

Home Charging

Domestic electricity supply:

VAT rate: 5% (reduced rate)

Cannot reclaim (domestic supply)

Business reimbursement:

Employer can reimburse at advisory rate (9p/mile)

No VAT implications for employee

Workplace Charging

Electricity for workplace chargers:

VAT rate: 20% (standard rate)

Fully recoverable by business

Normal input VAT rules apply

Public Charging

Charging at public chargers:

VAT rate: 20%

Recoverable if business journey

Keep VAT receipts/invoices

VAT on Charging Equipment

Home Charger Installation

For employees:

VAT recoverable by business

Charger becomes business asset

Installation costs included

Example:

Cost	VAT	Recoverable
Charger + install: £1,000	£200	£200

Workplace Chargers

Fully recoverable:

Equipment cost

Installation cost

Maintenance costs

Electricity costs

Capital Allowances (Not VAT, But Related)

First Year Allowances

Electric cars qualify for 100% FYA:

Deduct full cost from profits in year 1

Applies to new, unused EVs

Zero-emission requirement

Example:

EV Cost	Tax Relief (25% rate)
£40,000	£10,000

Charging Points

Also qualify for 100% FYA:

Charge point equipment

Installation costs

Includes home chargers for employees

Summary by Scenario

Buying an EV

Use	VAT Recoverable
100% business (pool car)	Yes - 100%
Company car (any private use)	No
Personal purchase	No

Leasing an EV

Use	VAT Recoverable
100% business	Yes - 100%
Any private use	Yes - 50%
Personal lease	No

Charging Costs

Type	VAT	Recoverable
Home (domestic supply)	5%	No
Workplace	20%	Yes
Public (business use)	20%	Yes

Equipment

Type	VAT Recoverable
Workplace chargers	Yes - 100%
Home chargers (for employees)	Yes - 100%
Personal home charger	No

Practical Tips

Keep Records

Essential documentation:

VAT invoices for all purchases/leases

Mileage records showing business use

Charging receipts

Lease agreements

Lease vs Buy Decision

For most businesses, leasing is more tax-efficient:

50% VAT recovery (vs 0% for purchase with private use)

Lower upfront cost

Include in operating expenses

Transfer depreciation risk

Salary Sacrifice

For employees:

Employer recovers VAT on lease

Employee gets tax-efficient car

Win-win arrangement

Common Questions

"Can I recover VAT on a Tesla I buy for myself?"

No. Personal purchases have no VAT recovery, regardless of whether you're VAT-registered.

"What about a car I use 90% for business?"

If purchased: No VAT recovery (any private use = no recovery)

If leased: 50% VAT recovery (the 50% rule applies regardless of actual split)

"Can I recover VAT on charging at motorway services?"

Yes, if:

It's a business journey

You have a VAT invoice/receipt

You're VAT-registered

"What about the company car I give to my employee?"

If leased: 50% VAT recovery

If purchased: No VAT recovery (employee private use)

Summary

Scenario	VAT Recovery
Buy EV for employee (any private use)	0%
Buy EV 100% business use	100%
Lease EV for employee	50%
Lease EV 100% business use	100%
Workplace charging	100%
Home charging (domestic)	0%
Charging equipment	100%

The Bottom Line

For most businesses, the key points are:

1Lease, don't buy — 50% VAT recovery vs 0%

2Install workplace chargers — full VAT recovery

3Install home chargers for employees — full VAT recovery

4Keep records — VAT invoices essential

The combination of 50% VAT recovery on leasing, plus 100% capital allowances, makes electric vehicles very tax-efficient for businesses. The VAT treatment is more favourable than petrol/diesel vehicles, adding to the overall financial case for going electric.