Unfair charging VAT is costing EV drivers £85m a year
Cutting VAT on public charging could save UK motorists £85 million per year, according to new research.
Campaign group FairCharge revealed the potential savings as it once again called for Chancellor Rachel Reeves to bring the tax on public charging in line with that on domestic energy to help boost EV adoption.
Currently, the full 20% VAT is applied to public EV charging while domestic energy attracts a reduced rate of 5%. The gulf is seen as a major obstacle for drivers without access to private charging, with an estimated 40% of households lacking off-street parking.
According to estimates by mapping service Zapmap, cutting the tax on public charging would save EV drivers around £85m in 2025, rising to £310m per year by 2030.
The UK is currently Europe’s leading EV market. In January almost 30,000 new electric cars were registered – a 41% jump over January 2024. Despite that success, FairCharge has warned many drivers could be put off switching unless public and private costs were brought into line.
FairCharge founder Quentin Willson said the change was ‘obvious and necessary’ to support wider EV adoption.
He said: “I ask the Chief Secretary of the Treasury that he must realise, with the UK as the most successful EV market in Europe, the opportunities for growth in the sector are significant. But holding that growth back is an archaic piece of tax legislation conceived before the era of electric cars.
“So many voices are now calling for a cut in the VAT on public charging that the Treasury’s negative response seems almost churlish. We spoke about this unfair tax anomaly before Labour came to power. It’s time for you and I to talk again.”
‘Two-tier system’
The latest call for action has been backed by major car makers and chargepoint operators, including Stellantis, Polestar and InstaVolt. They argue that the current imbalance risks creating a split in society that unfairly favours those with a driveway.
Group managing director of Vauxhall and Peugeot parent group Stellantis, Eurig Druce, said: “The path to electric has been set. But there is a real risk of creating a two-tier motoring system where those with a driveway pay less to get around than those without. That can’t be right and that’s why we support the FairCharge campaign.”
Delvin Lane, CEO at InstaVolt added: “The government has championed the EV transition with bold policies and strategy plans, but has yet to act on one of the simplest, most obvious changes – cutting VAT on public charging. This small change would bring fairness to those without home chargers, encourage more drivers to switch, and support price parity between home and public charging.
“It’s surprising that there has been no movement on this. With so much at stake for effectively so little cost, the Government should act now to remove this barrier and avoid stalling the EV revolution.”
Polestar UK’s managing director Matt Galvin, said car makers had invested billions in developing EVs but customers still needed confidence to make the switch. He noted: “We have been calling for VAT on public charging to be brought into line with home charging for some time now. This is an urgent requirement to support EV adoption, particularly to encourage the private buyer, and prevent unfair costs to those without driveways.”
Despite the renewed calls, it is thought unlikely that the government will budge on the tax gulf. As more drivers go electric, revenues from fuel duty and car tax on petrol and diesel vehicles are set to fall, leaving a multi-billion-pound black hole that VAT on public charging could help fill.
