Andy Burnham, the new Labour Party Prime Minister, has confirmed a VAT cut on electricity bills for households from October 1, a move that could save EV owners up to £900 annually. The plan, which targets households with driveways, has been welcomed by industry experts but raises concerns about equity for those without off-street parking.
Details of the VAT Cut
Starting October 1, VAT on electricity bills will be reduced, making home EV charging more affordable. Gurjeet Grewal, CEO of Octopus Electric Vehicles, praised the policy: "Cutting VAT on electricity bills makes one of the UK's cheapest forms of transport even more affordable. Drivers will now save close to £900 a year by charging an EV at home instead of filling up a petrol car - that’s enough to cover an annual insurance bill for many drivers."
Concerns Over Fairness
Vicky Edmonds, CEO of EVA England, a trade body representing EV drivers, highlighted the disparity: "But millions of drivers without a driveway will not fully benefit because they can't easily access home charging." She called for "real structural reform" through the government's Cost of Public Charging Review, emphasizing the need to tackle taxes and levies on chargepoint operators to ensure savings are passed to all drivers.
Industry Reactions
Jarrod Birch, head of policy and public affairs at Charge UK, noted the timing: "It happens to come at a time when HMRC is fighting a tribunal ruling that would reduce VAT for public EV charging." He added: "As the cost of public EV charging review progresses, we urge that even greater consideration must be paid to the VAT inequality, which just got bigger. The savings which are possible from driving electric can be a huge cost-of-living measure, and should be available to all."
Burnham's announcement was part of a broader policy blitz that also included capping bus fares at £2.
