Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Tue, 11 Feb 2020 14:44:24 GMT by Alan Collins
HMRC publish advisory fuel rates, the rate for electric cars is 4ppm. When the advisory fuel rate is paid to employees for petrol or diesel the VAT element (1/6th) of the rate can be claimed back provided sufficient receipts are provided by the employee showing sufficient VAT has been incurred. Do the same rules apply to the 4p rate for electric cars on the basis that VAT will likely be incurred by the employee at home charging the car. Would this have to be at 1/21th of the rate recoverable on the basis they can provide evidence of the VAT being incurred, presumably their household electricity bill? I am aware this may be a very small amount, however I am interested in the technical answer as I can't find any specific guidance or mention in legislation of this. Thanks in advance, Alan.
Posted Wed, 12 Feb 2020 13:51:00 GMT by HMRC Admin 11

Please refer to section 8 of VAT Notice 700/64 – Motoring Expenses:

Motoring expenses (VAT Notice 700/64): 8. Road fuel bought for business

Paragraph 8.8 establishes that you work out your input tax by multiplying the fuel element of the mileage allowance by the VAT fraction.

Assuming that the employee has been charged VAT at the reduced rate of 5% on the supply of electricity to their home, then the VAT fraction would be 1/21.

Paragraph 8.10 establishes that you must retain invoices issued to your employees when the fuel is delivered to them. This can be a full VAT invoice or a less detailed VAT invoice.

For cars charged at home, the employee would need an invoice from their electricity supplier.

Please note that an electricity bill may not show all the information required on a full VAT invoice or a less detailed VAT invoice.

Thank you.

You must be signed in to post in this forum.