Andy Burnham has introduced a new 2p-per-mile home EV charging rule this October, following the Prime Minister's decision to slash VAT charges. The Labour leader reduced VAT rates on domestic electricity from 5% to 0%, with the fresh policy taking effect from October 1 as one of his initial actions in Downing Street.
Cost savings for electric vehicle owners
The move has significant implications for electric vehicle owners, bringing down costs for those charging their cars on driveways or in off-street parking areas. Fresh calculations from costpermile.co.uk have determined the impact of these charges based on a typical family electric hatchback or SUV delivering an average efficiency of 3.5 miles per kWh.
The analysis reveals that motorists charging their EV battery at home through a smart tariff stand to benefit most substantially. For these drivers, the new 0% VAT charge will bring costs down to merely 7p per kWh or approximately 2p per mile.
Annual costs for drivers
Across an average annual mileage of 10,000 miles, drivers will shell out just £200 in electricity expenses. Those charging their EV battery using a standard domestic home tariff can equally benefit from the new 0% VAT rate.
Motorists utilising this method will pay 24p per kWh, working out at 6.9p per mile or roughly £690 annually, reports the Express.
Industry reaction and calls for further action
Matt Galvin, Managing Director at Polestar UK, has previously commented that the new measure would render EV ownership increasingly affordable for British drivers. He said: "Scrapping VAT on electricity will make owning and charging an electric vehicle even more affordable for millions of households. It is an important first step towards lowering the cost of living while accelerating the transition to clean transport. With some of the highest electricity prices in the developed world, reducing the cost of electricity must now become one of the government's defining economic and energy priorities."
Nevertheless, Matt was keen to highlight that further action was needed, calling on authorities to also look at eliminating VAT on public EV charging.
Public charging still penalised
Drivers using public charging points continue to be subject to 20% VAT, with costpermile.co.uk calculating the average retail park or supermarket charge at 52p per kWh, equating to roughly 12.6p per mile.
Matt added: "The new administration must now extend the five chargepoint grants for households without off-street parking beyond the March 2027 deadline and abolish VAT on public EV charging, which continues to unfairly penalise drivers without a driveway."
