The Treasury has rejected a Labour government proposal to reduce VAT on public electric vehicle (EV) charging from 20% to 5%, a move that would have benefited households without driveways. Currently, home electricity usage for EV charging is taxed at 5%, while public charging stations apply a 20% VAT rate, creating a disparity that disproportionately affects those without off-street parking.
Industry reaction
Dan Caesar, founder of Electric Vehicles UK, criticised the decision, stating: "VAT on public charging should be canned, making EVs cheaper for all. HMRC's appeal against this, despite best efforts of other departments, shows what a mess the government is in." He added that most British citizens can still benefit from cheaper motoring, and the government should promote that.
Tom Hurst, UK Country Director at Fastned, noted that while VAT is a direct cost to customers, charge point operators face rising input costs, particularly grid fees. He said: "Even with a VAT cut, there is still scope to take further steps to make public charging more affordable."
Daniel Kunkel, CEO of Gridserve, highlighted other obstacles, saying: "Designing and developing ultra-rapid EV charging hubs is more complex and expensive than home charging, and the rapidly rising standing charges continue to place significant strain on our model, increasing by as much as 462% in the last five years." He urged tackling both VAT and standing charges to deliver lasting benefits for drivers.
Government response
A government spokesperson said: "The government is boosting the EV transition by saving drivers up to £3,750 off a new car, with more than 95,000 people benefiting already, and investing over £7.5bn into the UK electric vehicle sector. We're also reviewing the cost of public EV charging which will look at the impact of energy prices, wider cost contributors, and options for lowering these costs for consumers."
