VAT Cut Widens Gap for EV Drivers Without Driveways
Andy Burnham is under pressure to assist households without driveways after his VAT reduction on home electricity widened the cost disparity for electric vehicle (EV) drivers. Home charging on a standard tariff costs just 7p per mile, according to Smart Home Energy Charge, but public rapid charging rises to 25p per mile—more than three times as expensive.
On Tuesday, the day after Burnham succeeded Sir Keir Starmer as Prime Minister, he announced, “We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.” However, the move has been criticised for entrenching inequality among EV owners.
Two-Tier System Under Fire
EV drivers currently pay 20% VAT on public charging, while those charging at home pay only 5%—a rate that has now dropped to zero for household electricity. This two-tier system has long been criticised for its unfairness, and the gap has now widened further. Tanya Sinclair, chief executive of Electric Vehicles UK, said the announcement “entrenches one of the biggest inequalities in the UK’s EV transition.”
She 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.”
Impact on Running Costs
The cheapest way to charge an EV is typically at home using a smart tariff, which automatically charges overnight when electricity prices are lower, reducing running costs to just a few pence per mile. For those reliant on public chargers, the cost is significantly higher. RAC senior policy officer Rod Dennis noted in April that the rise in EV numbers is “impressive” but added that people using public chargers “are still paying a significant premium.”
He said: “A sensible next step to further increase uptake would be to reduce VAT at public chargers, to match the rate levied on domestic electricity.”
Calls for Action
Critics argue that Burnham’s VAT cut, while beneficial for homeowners, does nothing to help the millions of drivers who depend on public chargepoints. The disparity could slow EV adoption among those without driveways, undermining the government’s net-zero goals. As the new Prime Minister faces mounting pressure, the question remains whether he will extend the VAT cut to public charging or introduce other measures to level the playing field.
