Electric vehicle drivers who depend on public chargers can face more than £1,000 in additional annual costs compared to those able to charge predominantly at home, with approximately £200 of that disparity down to VAT, new data reveals. The figures come amid fresh appeals to scrap the higher VAT on public EV charging.
Driveway divide widens
Mike Thompson, chief operating officer at Leasing Options, warned of a widening gap between EV owners with access to private driveways and the millions of motorists who rely on public charging infrastructure. He suggested elevated charging expenses could deter people from opting for an electric car, especially if home charging isn't available.
He explained: "For many motorists, home charging is one of the biggest advantages of owning an electric vehicle, but for millions of households that rely on on-street parking, accessing those savings can be much more difficult. That's why discussions around pavement charging and other solutions are important."
"As motorists consider switching to electric, there needs to be practical solutions in place that work for everyone regardless of their property type. The idea that EVs are expensive to run is outdated."
Industry campaign targets VAT gap
Last week, motoring sector leaders drew attention to the disparity as Prime Minister Andy Burnham's VAT reduction for energy bills took effect on October 1. Home charging now attracts zero VAT, following the abolition of the previous 5% VAT levied on household energy bills. In contrast, charging at a public facility remains subject to the standard 20% VAT rate.
ChargeUK, the electric vehicle charging trade body, compiled a letter urging the Prime Minister to bridge the gap, which impacts an estimated 10 million households unable to charge a vehicle at home. Those signing the letter included EVA England, EVA Cymru, The AA, Autotrader and the FairCharge campaign.
Cost difference quantified
ChargeUK worked out the VAT disparity based on a typical EV driver using a combination of 80 per cent home charging and 20 per cent rapid, compared to one relying entirely on public charging, on an 80 to 20 per cent standard and rapid charging mix. The driver with home charging's total annual expenditure came to more than £1,000 less than the driver dependent on public charging, with VAT now accounting for £200 of that difference.
Shane Brennan, chief executive officer at ChargeUK, said: "Cutting VAT on home electricity is the right call at the right time, it will relieve some pressure on what will be a tough winter for energy consumers, including EV drivers. However, it will also entrench the driveway divide for those current and want-to-be EV drivers who pay the full 20 per cent VAT to charge their cars at the worst moment."
"With diesel prices topping £2 a litre this week, and petrol not far behind, encouraging all drivers to go electric is the right thing to do, let's make it fair and accessible for all."
Earlier this year a First-tier Tribunal between community charging operator Charge My Street and the HMRC ruled that public EV charging should already qualify for the 'de minimis' lower rate of VAT, then 5 per cent. HMRC then confirmed that its position that 20 per cent applies remained unchanged and was appealing the decision.
