VAT on Electric Cars: What UK EV Drivers Need to Know

VAT Rates at a Glance

The bottom line is if you’re buying an EV privately, you’ll pay VAT during purchase, but charging at home generally benefits from a lower VAT rate than using commercial charging stations.

One of the most common questions we get asked by prospective EV owners is whether they can claim back the VAT paid on an electric car.

You cannot reclaim VAT on an electric car purchased for personal use. The VAT simply forms part of the purchase price as it would with any other vehicle purchase.

Businesses, however, can recover some or all of the VAT on electric cars, provided certain conditions are met.

A business can generally reclaim the full VAT on a purchased electric car only if the vehicle is used exclusively for business purposes and there is no private use whatsoever. So, if you’re taking the car on weekend trips, that will affect eligibility.

In practice, full VAT recovery on company cars is relatively uncommon unless the vehicle is strictly controlled and never used privately.

Leasing an Electric Car

Leasing usually gives greater flexibility from a VAT perspective.

If a VAT-registered business leases an electric vehicle that is used for both business and private journeys, it can usually reclaim 50% of the VAT charged on the lease payments. If the vehicle is used solely for business purposes, the full amount can be recoverable.

As VAT rules can become complex, businesses should always seek advice from a qualified accountant or tax adviser before making decisions based solely on potential VAT savings.

Why Is Public Charging More Expensive?

This is a bit of a sore area in the EV industry, with ongoing debate about the difference in VAT between home and public charging.

Critics argue that drivers without access to off-street parking are unfairly penalised because they often have little choice but to use public charging infrastructure. You might hear the issue referred to as the “pavement tax”.

Around 40% of UK households don’t have access to private driveways or dedicated off-street parking, so they physically can’t benefit from lower domestic electricity VAT rates.

Unfortunately, about 60% of those without access to off-street parking say they’ll never consider an EV, which is a real issue the UK faces as we move toward fully  EV targets, and could be eased by a reduction in public charging VAT.

If you’re curious whether your home is suitable for an EV charger, we have a full guide on home EV charger installation requirements.

If you’re planning to install a home EV charger, it’s worth understanding how VAT applies to both the charger itself and the installation work.

Here at ProEV, the price we quote for install already includes VAT, so you won’t get any unexpected charges when you receive your final bill. The 20% VAT is clearly shown on your invoicing to our pricing as transparent as possible.

While installing a home EV charger requires an upfront investment, our clients quickly find that the long-term savings outweigh the initial cost. Charging at home not only benefits from the reduced 5% VAT rate on domestic electricity, but also gives you access to cheaper overnight energy tariffs that aren’t available at public charging stations.

Our smart Ohme range of chargers can automatically schedule charging during off-peak periods when electricity prices are lowest. Over the lifetime of your vehicle, that’s a substantial savings compared with relying primarily on public rapid chargers.

VAT on electric cars isn’t the only tax you need to consider. Although EVs still offer lower running costs, some of the tax advantages that early adopters enjoyed have changed in recent years.

Vehicle Excise Duty (VED)

Fully electric vehicles used to be exempt from Vehicle Excise Duty (VED), commonly known as road tax. However, that changed in April 2025.

New electric cars registered on or after 1 April 2025 are now required to pay the standard annual VED rate, just like petrol and diesel vehicles. Electric cars registered between 1 April 2017 and 31 March 2025 also moved onto the standard rate from April 2025.

Expensive Car Supplement

If your electric car has a list price of more than £40,000, you’ll also need to pay the Expensive Car Supplement.

This is an additional charge of £440 applied for five years, starting from the second time the vehicle is taxed (so, years 2 to 6).

If you lease an electric car, the cost will be included in your final lease quote, and the leasing company will usually roll the charge into your monthly payments.

Company Car Tax Benefits

If you’re considering an electric vehicle as a company car, EVs continue to benefit from very favourable Benefit in Kind (BiK) tax rates compared with petrol and diesel alternatives.

The exact rate is set at 4% for the 2026/27 tax year, but these are subject to rise gradually each year. To compare, a high-emission diesel car has a current rate of 18%, so the difference is huge.

EV Ownership Costs at a Glance

It’s true that EVs are no longer exempt from VAT and there are other taxes to consider. But they are far cheaper to run than petrol or diesel. The cheaper fuel and lower maintenance costs make them well worth the investment.

The biggest difference comes from where you charge your EV. Home charging is incredibly convenient, and benefits from the 5% reduced VAT rate.

If you’re considering making the switch to an electric vehicle, investing in a dedicated home charger is one of the best ways to maximise those savings. The team at Pro EV offers a range of smart home EV chargers designed to help homeowners charge at the lowest possible cost.

Check out the full EV charging range here.