Andy Burnham has introduced a new £65 rule change that could affect all two million electric car owners in the UK. The new Prime Minister implemented a VAT cut on household electricity charging as one of his first measures, reducing the rate from 5% to 0%.
The discount will lower home electricity bills, providing a boost for cash-strapped Britons, and is also expected to significantly help electric car owners who charge at home. According to experts at Carwow, road users can anticipate cutting charging bills by around £65 per year, with some likely to save even more.
Carwow expert comments on savings
Siobhan Doyle, consumer writer at Carwow, said: “The proposed VAT cut on household electricity is a welcome boost for drivers who rely on home charging. Stripping the 5% VAT off domestic energy bills means the average EV driver could save around £1.24 per full charge—which adds up to roughly £65 a year for someone charging weekly, and even more for multi-EV households or high-mileage drivers.”
The Government has stated that all suppliers are expected to pass the VAT reduction on to all customers, including those on fixed tariffs. Mr Burnham's new policy is estimated to cost around £850 million across the 2026-27 financial year, but the new Labour leader has explained the plan has been fully costed.
Funding and concerns over public charging divide
The Prime Minister has stressed that the plan would be funded through axing the controversial Digital ID scheme, which was set to cost £1.8 billion over the next three years. Despite the savings for drivers, experts at Carwow have warned the move opens up an even further “divide” between home and public charging.
Up until now, motorists have paid 15% extra VAT to charge their cars away from home, with 20% VAT applied at public charging cables. Siobhan adds: "This move highlights the growing divide in EV ownership. While home chargers get a tax break, drivers without a driveway who rely on the public network are still stuck paying four times as much tax at 20% VAT. If the government wants to make electric vehicles truly accessible and fair for everyone, equalising public and home charging VAT remains the crucial missing piece of the puzzle."
