New Prime Minister Andy Burnham has announced the removal of VAT on domestic electricity, a move that will significantly reduce the cost of charging an electric vehicle at home but leaves drivers without driveways paying much more.
Home charging costs to drop
From October 1, 2026, VAT on electricity will be cut from 5% to 0% for six months. For EV drivers on a cheap overnight tariff like Octopus's Intelligent Octopus Go—currently 8p per kWh—the cost per mile could fall to 1.52p, down from 1.6p. A 100kWh battery costing £8 to fill would yield 500 miles of range at that rate.
Public charging remains expensive
Households without off-street parking must rely on public rapid chargers, which are subject to 20% VAT. Carwow estimates the same 100kWh charge could cost £81, with £16.20 going to tax. That works out at 16.2p per mile for a 500-mile range, or 20p per mile for a 400-mile range—matching the cost of running a petrol car.
Experts criticise inequality
EV industry groups have condemned the policy. Tanya Sinclair, chief executive of Electric Vehicles UK, said it “entrenches one of the biggest inequalities in the UK’s EV transition.” She added: “Millions of drivers without off-street parking have no choice but to pay 20% VAT… while those with a driveway will now pay none at all.”
Siobhan Doyle, consumer writer at Carwow, said eliminating VAT on domestic electricity “highlights the growing divide in EV ownership.” She argued: “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.”
RAC head of policy Simon Williams urged the PM to “give serious consideration to lowering VAT on public EV charging.” John Lewis, chief executive of chargepoint supplier char.gy, said the policy “throws the unfairness of the current VAT system into even sharper focus” and called for equalising VAT, noting: “The electricity is the same. The tax treatment should be too.”
