Prime Minister Andy Burnham's new regulation cutting VAT on domestic electricity charging from 5% to 0% took effect on October 1, reducing the average cost of charging an electric vehicle at home. The measure is intended to help households manage soaring electricity bills during the cost-of-living crisis, while also benefiting electric car owners who charge their vehicles on their driveways.
Cost Savings for EV Drivers
Using a Volkswagen ID.3 150kW Match Pro S 79kWh 5dr Auto as an example, LeaseElectric revealed that motorists charging with the EDF Energy Go Electric with Pod Point tariff will now pay just 1.89p per mile. This marks a drop from the previous rate of 1.97p. Over 10,000 miles, this saving means road users will pay approximately £189, rather than £198.
However, costs will vary depending on the specific tariff drivers have chosen. Those charging the Volkswagen EV using the Good Energy EV Tariff could pay as little as 1.47p per mile, down from 1.54p per mile prior to the reduction.
Impact on Households and Public Charging
LeaseElectric said: "For millions of households, this means lower electricity bills heading into winter. For electric vehicle drivers, however, it means something even more significant: charging an electric vehicle at home is about to become even cheaper."
"Because most EV owners charge their vehicles at home, removing VAT from domestic electricity means every home charge will cost less from 1 October 2026."
Specialists at Andersen EV have previously cautioned that some high-mileage drivers could save as much as £40 per year as a result of the new VAT changes.
Widening Driveway Divide
However, the development will come as a blow to those without a driveway or off-street parking who depend on public charging points to power their vehicles. Electricity charges at public charging points will remain unchanged, with motorists continuing to pay 20% VAT when topping up.
The new rule means the "driveway divide" between home rates will grow considerably wider.
