Electric vehicle drivers who rely on public chargers can pay more than £1,000 extra per year compared to those who can charge primarily at home, with around £200 of that difference attributed to VAT, new figures show. The renewed calls to end the higher VAT on public EV charging highlight a growing divide between EV owners with access to private driveways and the millions of motorists who depend on public charging infrastructure.
Home charging advantage
Mike Thompson, chief operating officer at Leasing Options, said higher charging costs could put people off choosing an electric car, particularly if they cannot charge at home. 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 The idea that EVs are expensive to run is outdated.”
Driveway divide
Thompson added: “In reality, when you look at how people actually charge their cars, mostly at home, often overnight, and increasingly on smart tariffs, the savings can be significant compared to petrol or diesel vehicles. The challenge is ensuring those benefits aren't limited to homeowners with private driveways.
“The research from ChargeUK shows that an EV driver who can charge predominantly at home pays more than £1000 less per year than someone who relies on public charging, with the VAT accounting for around £200 of that gap. That is why making charging accessible for residents who park on the street could help remove a key obstacle to EV adoption.
“If the UK is serious about the transition to EVs, drivers need straightforward, affordable charging options wherever they live. Ultimately, motorists shouldn't feel disadvantaged simply because they don't have off-street parking. Finding practical and economical solutions to EV charging will be an important step in encouraging more drivers to make the switch.”
Industry campaign
Last week, motoring industry leaders highlighted the divide as Prime Minister Andy Burnham's VAT cut for energy bills came into effect on October 1. It means that charging at home is now subject to zero VAT, as the move abolished the previous 5% VAT charged on domestic energy bills.
Meanwhile, charging at a public point is still subject to the standard 20% VAT rate, meaning that owners with no alternative but to use public chargers are paying much more, given that public chargers also cost considerably more to use per kWh than domestic energy rates.
ChargeUK, the EV charging trade association, put together a letter calling on the Prime Minister to end the divide, which affects the estimated 10 million households who cannot charge a vehicle at home. Signatories included EVA England, EVA Cymru, The AA, Autotrader and the FairCharge campaign.
Cost difference
ChargeUK calculated the VAT difference based on a typical EV driver using a mix of 80 per cent home charging and 20 per cent rapid compared to one solely using public charging, on an 80 to 20 per cent standard and rapid charging mix. The driver with home charging’s total annual cost came to more than £1,000 lower than the public charging reliant driver, with VAT now contributing £200 to the 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.
