A major electric vehicle manufacturer is calling on the government to reform a charging tax rule that it says unfairly penalises a significant number of UK drivers.
The VAT Disparity Driving Up Costs
Matt Galvin, Managing Director of Polestar UK, has publicly urged the Labour government to address a glaring inconsistency in the tax applied to electric vehicle charging. Currently, motorists using public charging points are subject to the standard 20% VAT rate. In stark contrast, those who can charge at home benefit from a reduced VAT rate of just 5% on their domestic electricity.
This financial discrepancy creates a tangible barrier to EV ownership. It disproportionately affects residents in urban areas and those without access to private, off-street parking, effectively forcing them to pay a premium to power their vehicles.
Customer Concerns and Manufacturer Intervention
Galvin confirmed that prospective customers are already citing the high cost of public charging as a deterrent to making the switch to electric. “We do have customers come to us and say ‘I can’t charge at home, I don't want to be going to public charging because it’s too expensive’,” he told the Express.
In response, Polestar has introduced its own scheme, Polestar Charge, to offer discounted access to public networks. However, Galvin framed this as a necessary subsidy from the company due to government inaction. “That's Polestar having to subsidise public charging because the Government has not reduced that VAT level,” he stated.
Government Review and Calls for Tangible Action
The government has acknowledged the issue in its Budget, noting that the price of public EV charging has risen. It has committed to a review, which will start in Q1 2026 and report by Q3 2026. The examination will look at energy prices and wider costs to explore options for lowering consumer expenses.
Despite this planned review, Galvin expressed scepticism about whether it will lead to concrete changes. “Actually, it remains to be seen as to whether or not there is any tangible action as a result of those reviews and policy changes,” he concluded, emphasising the need for decisive policy intervention to support equitable EV adoption across the UK.
