Prime Minister Andy Burnham is set to introduce a new rule change affecting motorists with driveways within days, with updates coming into force from October 1. The new Prime Minister will reduce VAT rates on domestic electricity charging from Thursday, with rates due to be cut from 5% to 0%.
The move is intended to help households battle escalating electricity bills amid the cost of living crisis, while also benefiting electric car owners who charge their vehicles at home.
Cost per mile falls for home charging
According to LeaseElectric, motorists will see the average cost of topping up their EV on their driveway fall under the new rule. Using a Volkswagen ID. 3 150kW Match Pro S 79kWh 5dr Auto as an example, LeaseElectric said motorists topping up with the EDF Energy Go Electric with Pod Point tariff will now pay just 1.89p per mile. This is down from the previous rate of 1.97p, reports the Express.
Over the course of 10,000 miles, the discount means road users will pay around £189 to use the road, instead of £198.
Tariff variations and savings
However, costs will vary depending on the specific tariff that road users have opted for. 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 before the cut.
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."
Public charging costs remain higher
Experts at Andersen EV previously warned that some high-mileage drivers could save as much as £40 per annum due to the new VAT updates. However, the news will be bad for those without a driveway or off-street parking who are charging their vehicles at public charging bays.
Electricity fees will not be cut at public plugs, with road users paying 20% VAT to top-up. The new rule means the "driveway divide" between home rates will significantly widen.
