Prime Minister Andy Burnham has introduced a two-tier motoring rule change that is set to infuriate thousands of road users. The new PM cut VAT rates on domestic electricity from October, just hours after entering Downing Street, in a move that will slash costs for electric car owners who charge at home.
VAT cut on home charging
The plan reduces VAT from 5% to 0% on home electricity, providing a significant boost for EV owners. Experts at Andersen EV estimate that prices could drop by as much as £40 per year for high-mileage drivers. Nearly all of the UK's two million electric car owners can charge at home, with studies showing up to 90% of EV drivers use domestic charging.
Public charging disparity
However, EV owners without access to off-street parking—such as those in apartment blocks or terraced housing in major cities—will see no benefit. Public charging VAT remains at 20%, meaning the gap between home and public charging rates has widened from 15% to 20%.
This two-tier system is a major blow to thousands of EV owners who already faced higher costs. They are likely to be furious, questioning why no help has been provided for their situation.
Industry reaction
The motor industry has long demanded action on VAT rates for charging. The Society of Motor Manufacturers and Traders (SMMT) has called for public charging VAT to be reduced to align with the 5% levied on home charging, describing the 20% fee as a “high rate”. Instead of heeding this lobbying, Burnham's plan has gone in a different direction.
While the majority of EV owners will benefit from the discount, thousands who cannot will be left wondering what is next. The new rule is weeks away, but some road users are already questioning its fairness.
