Just days into his new role as Prime Minister, Andy Burnham has announced a cut to domestic VAT rates on electricity from 5% to 0%, effective October 1. The move is expected to benefit electric car owners who charge at home, with experts predicting savings of up to £40 per year for high-mileage drivers.
How much can EV owners save?
David Martell, CEO of home charger company Andersen EV, estimated that the average EV driver charging at home would save around £20–£25 per year. For those covering more miles, the saving could be closer to £35–£40. “For the average EV driver charging at home, the saving on charging alone is likely to be around £20–£25 per year. For higher-mileage drivers, it could be closer to £35–£40,” Martell said. “That may not sound transformational on its own, but it’s the direction of travel that matters. It demonstrates a willingness to support the transition with practical measures that make a real difference to consumers.”
According to Carwow, the cost of topping up a 100kWh battery would drop from £26.11 to £24.87 under the new system, saving £1.24 per charge. Drivers who fully charge at least once a week could save around £65 per year.
Blow for those without driveways
The VAT cut only applies to domestic electricity, meaning public charging stations will continue to charge 20% VAT. This widens the cost gap between home and public charging, affecting motorists without access to a driveway. The Society of Motor Manufacturers (SMMT) has previously called for public charging VAT to be reduced to align with the 5% rate on home charging, but no change has been announced.
