Andy Burnham, the new Labour Party Prime Minister, has confirmed a VAT reduction on household electricity bills from 5% to zero, effective from 1 October. This change will save a typical household about £45 per year. However, the policy has sparked warnings of an 'unfair' £81 charge for households without driveways, as electric vehicle (EV) owners reliant on public chargepoints face significantly higher costs.
VAT Cut Benefits Home Charging but Penalises Public Users
The VAT cut primarily benefits EV owners who charge at home using private driveways or off-street parking. According to Zapmap, ultra-rapid charging currently costs an average of 79p/kWh, while slow and fast charging averages 54p/kWh. For those without off-street parking, public chargepoints charge an average of 83p per kWh. This means a 100kWh EV would cost £81 to charge from empty to full on a public chargepoint, while a 50kWh EV would cost £40.50.
Guy Bartlett, CEO of public chargepoint operator Believ, urged Burnham to address the disparity: 'We welcome the reduction in VAT on home energy, which will provide valuable support within the ongoing cost-of-living crisis. However, for EV drivers who can't charge at home, and rely solely on public charging, they continue to face an increasing VAT penalty simply because they don't have a driveway. It's time to end this postcode lottery and align VAT on public charging with home energy to make EVs more affordable for everyone.'
Industry Calls for VAT Equalisation
John Lewis, chief executive of public EV chargepoint supplier char.gy, echoed the sentiment, stating that the policy 'throws the unfairness of the current VAT system into even sharper focus.' He added: 'The next step has to be equalising VAT on public charging. The electricity is the same. The tax treatment should be too.'
For the average EV driver charging at home, the saving on charging alone is likely to be around £20–£25 per year, according to Bartlett. For higher-mileage drivers, it could be closer to £35–£40. He noted: 'That may not sound transformational on its own, but it's the direction of travel that matters. It demonstrates a willingness to support the transition with practical measures that make a real difference to consumers.'
Impact on EV Adoption and Cost-of-Living
The VAT cut comes amid ongoing cost-of-living pressures, but critics argue that the policy disproportionately affects lower-income households who are less likely to have driveways. Research indicates that EV owners without off-street parking face a 'VAT penalty' of up to 20% on public charging costs compared to home charging. The government has been urged to extend the zero VAT rate to public chargepoints to ensure equitable access to affordable EV charging.
