Andy Burnham's October 1 VAT cut will widen the driveway divide to a staggering £2,000, it has been warned. Analysis from costpermile.co.uk found that a homeowner topping-up at home using a smart charging tariff would pay around £200 per year in electricity fees. Meanwhile, those relying on rapid chargers in the community would be splashing out over £2,200 per annum.
Policy details and impact
Andy Burnham's policy to temporarily reduce VAT on domestic household electricity from 5% down to 0%, running from October 2026 to July 2027, will therefore contribute to the financial gap between EV drivers who can charge at home versus those who rely on public charging networks.
Experts at costpermile.co.uk said: "A homeowner with a driveway charging their EV overnight spends just £200 annually in electricity. A terraced-home dweller who drives the exact same 10,000 miles but relies on public rapid chargers spends £2,260 annually — paying an extra £2,060 every year simply because they park on the road."
Calls for equalised VAT rates
Ben Nelmes, of New AutoMotive, said: "The Government has handed EV drivers with a driveway a tax cut on power they were already paying least for.
"Meanwhile, the driver charging on a public charger down the road, because they’ve got nowhere else to plug in, is still handing 20% to the taxman on every single mile.
"That's a design flaw, and it leaves us with a VAT system that asks most of those who can least afford to contribute."
In a new report, New AutoMotive has called for the VAT rates on home charging and public charging to be equalised. However, because of the risk that cuts may not be fully passed on to consumers, the consultancy has also backed the introduction of "time of use" tariffs for public chargers, so drivers can fill up cheaply overnight.
Industry reaction
John Lewis, chief executive of charging provider Char.gy, said: "Public charging isn't a lifestyle choice for millions of drivers, it's the only option they've got.
"Taxing that at four times the rate of home charging punishes exactly the people the switch to electric is supposed to work for."
