EV charging at home boosted by VAT cut

The new new 0% home electricity VAT rate will help EV drivers who can charge at home save even more than people who rely on public charging – but there are calls for this ‘driveway divide’ to be eradicated.  

According to the EV charging trade association ChargeUK, owners of electric cars will save an average of £200 per year through the VAT change, one of Andy Burnham’s first policies announced as Prime Minister, which came into force on October 1.

This figure is calculated based on a typical EV driver using a mix of 80% home charging and 20% rapid public charging, compared with one solely using public charging with an 80% to 20% standard to rapid charging mix. ChargeUK said that a home charging driver’s total annual cost would be more than £1,000 lower than a driver reliant on public charging.

ChargeUK has written a letter to the Prime Minister, with signatories including EVA England, EVA Cymru, The AA, Autotrader and the FairCharge campaign, calling for an end to the gap in VAT costs.

Shane Brennan, chief executive officer at ChargeUK, said: “Cutting VAT on home electricity is the right call at the right time, it will relieve some pressure on what will be a tough winter for energy consumers, including EV drivers.

“However, it will also entrench the driveway divide for those current and want-to-be EV drivers who pay the full 20% VAT to charge their cars at the worst moment.

“With diesel prices topping £2 a litre this week, and petrol not far behind, encouraging all drivers to go electric is the right thing to do, let’s make it fair and accessible for all.”

ChargeUK says the cost to the Treasury of aligning public and home charging VAT would be around £180 million a year, which it argues will be considerably lower than the £1.1 billion expected to be raised annually by the forthcoming eVED tax.

It also notes the tribunal ruling in a case brought by Charge My Street earlier this year which found that public charging VAT should already be applied at the lower rate, which at the time was 5% – a ruling against which HMRC has appealed.

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