Andy Burnham will oversee a new £27 rule change affecting motorists with driveways across the UK this week. The new Prime Minister will update domestic VAT electricity rates, with costs slashed from 5% to 0% from October 1.
However, the move will have a knock-on effect for electric car owners, with drivers set to enjoy lower charging costs. According to analysis from New Automotive, EV owners using a dedicated charger on a standard tariff are the most affected and look set to save £27 per car per year.
VAT cut to 0% from October 1
Domestic VAT charging rates will be reduced to 0% from October 1. The news is set to be a massive boost for EV drivers as traditional petrol and diesel owners struggle with rising costs.
Speaking exclusively to The Express, Tanya Sinclair, CEO of Electric Vehicles UK said: “Cutting VAT on household electricity makes driving electric even cheaper, with EV owners who charge at home saving up to £27 a year from the tax cut alone.”
Robin Heap, CEO of EV charging firm Zest also told The Express that Mr Burnham’s VAT cut was set to be “good news for EV drivers with a driveway”.
Savings vary by tariff type
According to New Automotive, as many as 797,000 electric cars are being topped up on a standard tariff. Motorists who use a special dedicated EV tariff to charge their vehicles will still save money, but the discounts will be less dramatic at just £13 per car per year.
New Automotive explained that motorists with a dedicated off-peak EV tariff will save less because there was relatively little VAT to abolish. However, these drivers make up the majority of owners, with as many as 934,000 electric car owners charging their vehicle this way.
New Automotive data shows that motorists using an alternative home charging method will also see their charging bills cut. These drivers should be expected to save £21 per car per year in another major boost for cash-strapped road users.
Public charging excluded from cut
However, the new changes will only cut VAT rates on domestic electricity supply, meaning road users relying on public plugs won’t be able to take advantage. Instead, motorists will have to pay 20% VAT, with the driveway divide only extended.
