The temporary cut in VAT on domestic electricity, which reduced the cost of charging electric cars at home, has been extended until July. The policy, introduced on October 1, slashed the VAT rate on household electricity from 5% to 0% and was originally funded only until the end of the financial year in April. The extension was confirmed by John Healey in his Autumn Budget statement.
Savings for home EV charging
Under the change, motorists charging vehicles on their driveway can top up for as little as 7p per kWh or 2p per mile. Experts at Andersen EV previously suggested that EV owners could save around £20 under the change, with high-mileage drivers potentially saving as much as £40.
Speaking in the House of Commons, Mr Healey said: "In the first week of this new Government we took VAT off electricity for 29 million households. Today, I'm expecting that VAT cut through the winter and spring to July."
Access for those without driveways
Labour has also cut red tape on cross-pavement solutions, allowing those without a driveway to benefit from domestic electricity tariffs through measures such as pavement gullies. Although planning permission is cut for many, local permission is still required to install them, and there will be no change for motorists living in one of 10,000 conservation areas.
Public charging VAT unchanged
Ahead of the Budget, there had been calls from motoring experts to reduce VAT on public electric vehicle charging from 20% to 5%, but this was not confirmed by Mr Healey in his Budget statement. This means the "driveway divide", the gap between home and public VAT charging rates, will remain at 20%.
Reacting to the news, AA President Edmund King said: "The Chancellor has missed the chance to help accelerate the transition to electric cars by retaining the 20% VAT rate on public charging. Around two-fifths of households do not have any form of dedicated off-street parking, and retaining the difference in VAT rates only widens the pavement tax."
He added: "Even more so considering that VAT on domestic energy is temporarily held at 0% to 1 July 2027 which is welcome and reduces the cost of home charging."
