The Prime Minister, Andy Burnham, has introduced a new regulation cutting VAT on domestic electricity charging from 5% to 0%, effective from October 1. The measure aims to help households tackle rising electricity bills during the cost-of-living crisis while offering support to electric car owners who charge their vehicles at home.
Lower Charging Costs for EV Drivers
Drivers will see the average cost of charging their EV on their driveway fall under the new regulation. Using a 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, down from 1.97p previously. Over 10,000 miles, road users will pay approximately £189 instead of £198.
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.
Industry Reaction and Savings Potential
LeaseElectric said: "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. 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."
Specialists at Andersen EV have previously cautioned that certain high-mileage drivers could save as much as £40 per year as a result of the new VAT changes.
Impact on Public Charging and the 'Driveway Divide'
The development is likely to prove frustrating for those without a driveway or off-street parking, who depend on public charging points for their vehicles. Electricity costs will remain unaffected at public charge points, with motorists continuing to pay 20% VAT when topping up. The new regulation means the "driveway divide" between home rates will widen considerably.
