Prime Minister Andy Burnham will introduce a new driveway rule this week, with changes set to affect motorists who charge electric vehicles at home. From October 1, the new Prime Minister will slash VAT rates for domestic electricity, and electric car owners who charge their vehicles at home could benefit from lower costs.
What is the new driveway rule?
Andy Burnham has confirmed he will slash VAT on domestic electricity supply from 5% to 0% from October 1. The plan is aimed at tackling rising electricity costs, but the move will also affect EV drivers who top up their battery at home.
Those charging their vehicles on a driveway will be tapping into their domestic electricity supply, meaning they can take advantage of the new 0% fee. Smart chargers plug directly into home domestic supply, so road users will still benefit from the 0% rate.
Who is affected and how much can drivers save?
Anyone tapping into their home electricity to charge their EV on a driveway or outside their home can take advantage of the new savings. The new rule runs until the end of March 2027, giving road users time to benefit from the lower costs.
Electric car charging specialists Andersen EV has claimed that the average owner could save between £20 and £25 per year. However, high-mileage drivers could save as much as £40 per year. Carwow has explained that the cost of charging a 100kWh battery would drop from £26.11 to just £24.87, suggesting road users topping up cars every week would be likely to save around £65.
According to LeaseElectric, a Volkswagen ID.3 150kW Match Pro S 79kWh 5dr Auto using the EDF Energy Go Electric with Pod Point tariff will now pay just 1.89p per mile to use the roads, lower than the previous fee of 1.97p per mile.
What are the drawbacks?
Motorists relying on public charging cables are likely to feel frustrated by the new updates. Despite calls from industry to bring VAT rates into line, the gap has now been widened. As domestic VAT rates drop to 0%, public fees will remain at 20%, extending the so-called 'driveway divide'.
Those with access to a driveway can pay as little as 7p per kWh to charge their vehicles, compared to over 50p per kWh for those charging at public bays. Ben Nelmes, chief executive of New AutoMotive, said: "The driver charging on a public charger down the road, because they've got nowhere else to plug in, is still handing 20% to the taxman on every single mile. That's a design flaw, and it leaves us with a VAT system that asks most of those who can least afford to contribute."
