As part of 2020’s commitment to its members by providing online training for accountants in practice, we have provided a Business News Update for our members.
Last week the UK saw the milestone of three quarters of UK adults receiving the first dose of vaccine and over half of the population having both doses.
The four nation recovery summit took place on Thursday on how to emerge from the Covid pandemic and topics discussed were working together, presentations on the United Kingdom’s COVID-19 context and an assessment of the COVID impact on the economy and public services. Following the meeting there were expressions from leaders to continue with these in the future. We will see how the four nations summit progresses over the next few months.
The governments approach to reopening international travel saw Portugal move to the amber list to guard public health against variants of concern following the first traffic light review. A number of countries have been moved to the red list. See: Red, amber and green list rules for entering England – GOV.UK (www.gov.uk)
Recovery of VAT on Electric car charging
The government are committed to encouraging more and more people to drive electric cars and have reduced or eliminated the income tax benefits of providing electric company cars or charging points for employees. Since 6 April 2019 there has been no taxable benefit for employees where they use an electric charging point at their place of work, provided the facility is available to all staff. But what are the VAT implications of the supply of electricity and what if public charging points are used?
HMRC have issued Revenue and Customs Brief 7 (2021) which explains HMRC’s policy concerning the VAT treatment of charging of electric vehicles when using charging points situated in various public places.
The brief clarifies that supplies of electric vehicle charging through charging points in public places are charged at the standard rate of VAT. It also explains when input tax can be recovered for charging electric vehicles for business purposes.
The HMRC brief confirms that input tax can be recovered on electricity used to fuel a car intended for business use where:
- The charging takes place at the business premises of the VAT-registered business
- The charging is at the home of a sole proprietor
VAT cannot be recovered where the charging is at the home of an employee as the supply is then not made to the company.
Where employees charge an employer’s electric vehicle (for both business and private use) at the employer’s premises the employee needs to keep a record of their business and private mileage so that the employer can work out the amounts of business use and private use for the vehicle.
It is hoped that a simpler system can be found such as a scale charge similar to that used for the supply of fuel for private use.
Output VAT on the supply of private road fuel
HMRC have amended the VAT road fuel scale charges with effect from 1 May 2021. Businesses must use the new scales from the start of the next prescribed accounting period beginning on or after 1 May 2021.
The valuation rate tables:
- set out the new scale charges (a VAT inclusive amount)
- show the VAT to be charged if you account for VAT on an annual, quarterly or monthly basis
- must be operated in accordance with the notes to the valuation table
Notes to the CO2 emission figures
You will need to check your car’s CO2 emissions figure if you cannot get this from your log book.
Where the CO2 emission figure is not a multiple of 5, the figure is rounded down to the next multiple of 5 to determine the level of the charge.
For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the 2 figures should be used. For cars which are too old to have a CO2 emissions figure, you should identify the CO2 band based on engine size. If its cylinder capacity is:
- 1,400cc or less: use CO2 band 140
- 1,401cc to 2,000cc: use CO2 band 175
- 2,001cc or above: use band 225 or more
Using the table
You need to choose the correct road fuel charge based on the CO2 emission and the length of your VAT accounting period (either 1 month, 3 months or 12 months).
You will need to apportion the fuel scale charge if you change car during the accounting period and, at the end of the period, you do not own or have not been allocated the car.
You need to work out how much of the accounting period you used each car for, and record this as a percentage of the accounting period. You must apply this percentage to each road fuel scale charge to get a total figure.
Click here for more details about the C19 resources and updates available to 2020 Members.