Andy Burnham is facing fresh calls to extend his VAT reduction on household electricity to public electric vehicle chargers, following new analysis that reveals a significant financial penalty for drivers who cannot charge at home. The research, conducted by the transport think tank New AutoMotive, estimates that UK EV drivers collectively pay an extra £172 million each year in VAT on public charging – a figure that far outweighs the savings from the recent domestic electricity VAT cut.
VAT disparity hits hardest for renters and those without driveways
The temporary VAT cut, announced by the Mayor of Greater Manchester, was designed to ease the cost of charging electric vehicles. However, the analysis shows that it disproportionately benefits EV owners who already have access to the cheapest charging options – typically those with dedicated home chargers and off-street parking. In contrast, drivers who rely entirely on the public charging network, often renters or those without a driveway, continue to pay the full 20% rate on every charging session.
According to New AutoMotive, the financial gap is stark. A driver with a home charger on a cheap overnight EV tariff saves just £13 a year from the VAT cut, yet still pays an estimated £42 in VAT on public charging. In every driver segment analysed, the amount of VAT paid on public charging exceeds the savings from the home electricity cut. For the most disadvantaged group – those with no access to home charging at all – the saving is zero, while they continue to shoulder the full tax burden.
Campaigners call for fairer tax treatment
Ben Nelmes, Chief Executive of New AutoMotive, criticised the current policy, stating: “The Government have handed EV drivers with a driveway a tax cut on power they were already paying least for. Meanwhile the driver charging on a public charger down the road, because they’ve got nowhere else to plug in, is still handing 20% to the taxman on every single mile. That’s a design flaw, and it leaves us with a VAT system that asks most of those who can least afford to contribute.”
John Lewis, CEO of char.gy, a company specialising in on-street charging solutions, echoed these concerns: “Public charging isn’t a lifestyle choice for millions of drivers, it’s the only option they’ve got. Taxing that at four times the rate of home charging punishes exactly the people the switch to electric is supposed to work for. If we want a fair transition, VAT can’t keep treating a driveway as a tax break.”
Impact on the transition to electric vehicles
The findings highlight a growing inequality in the UK’s shift to electric mobility. While the government has promoted EV adoption as a way to reduce emissions and running costs, the current tax structure may be deterring those who cannot charge at home. With over a third of UK households lacking off-street parking, the issue affects a significant portion of the population.
New AutoMotive’s analysis suggests that aligning VAT rates between home and public charging could save drivers millions and encourage wider adoption. The think tank is urging Andy Burnham and other policymakers to address this imbalance as part of broader efforts to ensure a fair and inclusive transition to electric vehicles.
The call comes amid growing scrutiny of the cost-of-living pressures faced by drivers, with electricity prices remaining volatile. For many, the ability to charge affordably is a deciding factor in whether to switch to an EV, and the current VAT disparity could be slowing progress.
As the debate continues, campaigners are pressing for urgent action. The £172 million annual penalty, they argue, is not just a financial burden but a barrier to the UK’s net-zero ambitions. Extending the VAT cut to public chargers, they say, would be a simple and effective step towards fairness.
