Electric vehicles are becoming ever more popular with people and businesses alike looking to reduce their overall carbon emissions, along with cutting costs and preparing for the future. However, even though EVs are often seen to be more cost-effective over time, businesses still ask the question: Can you claim VAT back on electric cars?
Sadly, the answer isn’t just a simple yes or no; it depends on how the business is using that vehicle, therefore, how HMRC interprets your usage.
Can You Claim VAT On Electric Cars?
In short… Yes, but only under certain conditions.
Many of you reading might be used to having a company car for business purposes, you drive that car to work, meetings, appointments, etc, but it is also the vehicle you use personally, such as to drive to go shopping or visit family. Well, HMRC states that the vehicle has to be 100% business use. Therefore, personal use isn’t allowed.
This may come as a surprise to some of you. However, this is not a new rule. It’s the same guidance that is given to petrol and diesel vehicles. But, given the growing interest in electric vehicles and fleets, it is more important than ever to truly understand the rules in detail.
Claiming VAT on Electric Cars: What You Can (and Can’t) Reclaim
Here is how it breaks down:
- VAT on the vehicle purchase:
- You can reclaim 100% VAT on any electric car if it is exclusively for business.
- For cars with any private use (even commuting), no VAT can be reclaimed.
- If you have an electric van or commercial vehicle, you are in luck, as the rules are slightly more lenient. You can generally reclaim VAT, even if there is some incidental private use.
- VAT on lease payments:
- If you are to lease an EV, you can reclaim 50% of the VAT on the lease for private use.
- If the lease is strictly for business use, then you can claim 100% VAT back on the vehicle.
- VAT on charging costs:
- If you charge your EV at work or a public station, and it is a business expense, VAT can be reclaimed.
- Home charging is trickier. VAT can only be reclaimed if the electricity is billed to the business directly (not the employer).
- A mileage allowance or EV home reimbursement system can be a simpler way of managing your home charging.
We Power Your Car offers a useful breakdown on reclaiming VAT for EV home charging.
Can a Company Reclaim VAT on an Electric Car?
Yes, but once again, the case matters.
Most businesses will struggle to prove that a car has no private use whatsoever, which is why recovery on EV purchases is very rare unless the car is strictly a pool vehicle or used by sales reps with no personal use (again, rare).
However, there is more flexibility when it comes to:
- Commercial EVS (such as electric vans)
- Charging infrastructure and installation
- Maintenance and running costs
Maynard Johns outlines scenarios where VAT can and cannot be claimed depending on fleet use.
Maximising VAT Reclaim on EVS
If your business is transitioning over to electric, here are some tips to get the most from your VAT position:
- Use EVs as pool vehicles: Keep them at the business premises, use a booking log, and restrict private use.
- Ensure charging infrastructure is in the business name: This makes it easier to reclaim VAT on energy used.
- Consider a workplace charging scheme: It centralises use and simplifies future VAT recovery.
- Keep records clean: Mileage logs, charge point receipts, and driver logs are essential.
Fuel Cards and EV Charging: Simplify Your VAT Tracking
One way to simplify VAT management on EV charging is with a dedicated EV charge card.
Right Fuel Card’s partnership with Rightcharge means we now offer EV charging solutions that:
- Track public and home charging
- Provide clear VAT invoices
- Help control and report on fleet usage
This is ideal if you’re transitioning to electric and need transparency around running costs and tax reclaim.
Learn more about our EV fuel card solutions for UK businesses.
Final Thoughts
So… can you claim VAT on electric cars? Yes, but it depends on use.
If your business can prove that the vehicle is 100% business use only, the VAT will be fully reclaimable. For everyone else with mixed-use vehicles then you will need to understand HMRC’s criteria and keep your records clean.
With the right setup—and the right EV charge card—you’ll stay compliant, maximise your reclaim, and make the switch to electric far smoother.
📞 Want help finding the best EV fuel card for your business? Get in touch with us or use our fuel card comparison tool to explore your options.
