Charging an electric vehicle at home raises questions about electricity costs, tax deductions and how to account for the electricity used for motoring. Here is what you need to know about EV charging and its relationship to road tax.
Home Charging Electricity: Personal vs Business
If you charge your electric vehicle at home, the electricity used for business journeys is tax-deductible. The simplest way to handle this is to use the HMRC advisory electricity rate — currently 9 pence per mile for fully electric vehicles — which covers all electricity costs including home charging. This rate is paid as a mileage allowance by employers or claimed as a deduction by self-employed drivers. Using the advisory rate means you do not need to track individual electricity bills.
VAT on Home Electricity for EVs
VAT is charged on electricity at the standard rate of 20%. If you are VAT-registered and use your EV exclusively for business, you can reclaim the full VAT on your electricity bill — but this requires a separate meter or a reasonable apportionment based on business mileage. For most private EV owners, VAT on electricity is simply a cost of charging. Some energy tariffs offer EV-specific rates with reduced standing charges, which can reduce the cost per kWh.
Company Car Drivers: Home Charging Arrangements
Company car drivers who charge at home may need to reimburse their employer for electricity used, or employers may provide a fuel card for public charging instead. HMRC's position on free home electricity for company car drivers has tightened: if your employer provides free home charging, this may be treated as a taxable benefit. Using the advisory mileage rate and claiming back only for business miles is the cleaner approach from a tax perspective.
Installing a Home Charger: Tax Implications
Installing an EV home charger is eligible for the 100% first-year capital allowance for businesses — meaning the full installation cost can be deducted from taxable profits. For landlords installing chargers for tenants, different rules apply. Homeowners installing a charger purely for personal use cannot claim capital allowances, but the EV charger installation may be VAT-rated at a reduced rate during certain government scheme periods. Check current VAT rates on installation work.
Road Tax and Home Charging
Importantly, home electricity used to charge an EV is not subject to road tax directly. VED is a fixed annual charge based on CO2 emissions, not on electricity consumption. This is a key advantage of EVs: they are taxed on their zero tailpipe CO2, not on the energy used to power them. The electricity cost of charging is a running cost, not a tax consideration. Use the car tax calculator at Cartax.online to see how the £0-£10 annual VED for an EV compares to the charging electricity cost.