Prime Minister Andy Burnham has announced that his government will reduce the VAT on domestic electricity bills from 20% to 5%, effective from 1 October. While this move is intended to ease the financial burden on households, it has raised concerns about fairness for electric vehicle (EV) owners who lack off-street parking.
Tanya Sinclair, chief executive of Electric Vehicles UK, highlighted the inequality this policy could reinforce. She explained that electricity supplies to domestic premises are subject to a reduced VAT rate of 5%, but electricity supplied for charging EVs in public locations is charged at the standard 20% VAT rate. As a result, millions of EV drivers who do not have access to a driveway or private parking must pay a higher VAT rate when charging their vehicles in public spaces.
Sinclair told the Press Association: “Millions of drivers without off-street parking have no choice but to pay 20% VAT when charging in public, while those with a driveway will now pay none at all. If this Labour Government is serious about a fair transition, it cannot ask EV drivers to pay different prices for the same electricity simply because of where they live.”
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Similarly, Siobhan Doyle, a consumer writer at Carwow, noted that eliminating VAT on domestic electricity “highlights the growing divide in EV ownership.” She added: “If the Government wants to make electric vehicles truly accessible and fair for everyone, equalising public and home charging VAT remains the crucial missing piece of the puzzle.”
Simon Williams, head of policy at the RAC, also urged the Government to consider lowering VAT on public EV charging to help those without driveways switch to electric motoring more affordably.
On BBC Radio 4’s Today programme, newly appointed Business Secretary Jonathan Reynolds described the VAT cut on domestic electricity bills as “a statement of priorities.” In response to concerns about the funding of this measure, Reynolds stated that it represents a reallocation of resources, with the Government choosing to ease pressure on households. “It’s a straightforward switch spend, it’s the right decision to make, and one that will be made by the British people,” he added.
The debate underscores the challenges facing the transition to electric vehicles, particularly in ensuring equitable policies that support all drivers regardless of their living arrangements.