A new regulation introduced by Andy Burnham has come into effect this month, cutting VAT rates on domestic electricity charging from 5% to 0% as of 1 October. The move is designed to help households manage rising electricity bills amid the cost-of-living crisis and to benefit electric car owners who charge their vehicles at home.
Lower costs for home charging
Under the new rule, drivers will see the average cost of charging their EV on their driveway fall. Taking the Volkswagen ID. 3 150kW Match Pro S 79kWh 5dr Auto as an example, LeaseElectric stated that motorists charging with the EDF Energy Go Electric with Pod Point tariff will now pay just 1.89p per mile.
This marks a drop from the previous rate of 1.97p. Over the course of 10,000 miles, this saving means road users will pay around £189 instead of £198.
Varied savings by tariff
However, costs will vary depending on the specific tariff chosen. Those charging the Volkswagen EV using the Good Energy EV Tariff could pay as little as 1.47p per mile, down from 1.54p per mile prior to the reduction, reports the Express.
LeaseElectric commented: "For millions of households, this means lower electricity bills heading into winter. For electric vehicle drivers, however, it means something even more significant: charging an electric vehicle at home is about to become even cheaper."
Public charging remains unchanged
Because most EV owners charge their vehicles at home, removing VAT from domestic electricity means every home charge will cost less from 1 October 2026. Experts at Andersen EV have previously cautioned that some high-mileage drivers could save as much as £40 per year due to the new VAT changes.
This change will be unwelcome news for those without a driveway or off-street parking who depend on public charging points. Electricity costs at public charging stations will remain the same, with motorists continuing to pay 20% VAT when topping up. The new rule means the "driveway divide" between home rates will significantly increase.
