London 2024: Electric vehicle drivers are being unfairly disadvantaged by outdated, higher rates of VAT on public electric car charging, according to campaign group FairCharge and industry backers who are urging the Chancellor to offer a fair charging boost to electric vehicle adoption in next week’s Budget.
Electric vehicle drivers who can charge at home pay just 5% VAT on their energy bill, but 38% of those without driveways are forced to use public chargers and pay the full VAT rate of 20%. The price difference between home and public charging is now significant and acting as a barrier to EV adoption.
Auto Trader has calculated that drivers charging off peak at-home could save £865 annually compared to internal combustion engine vehicles, but that a driver using public rapid chargers would pay £264 more over a year.1
An open letter, delivered to Jeremy Hunt by FairCharge, has been signed by energy provider E.ON, ChargeUK, Auto Trader, Jaguar Land Rover, Stellantis, Polestar, Autocar Magazine, Greenpeace, Transport & Environment, The Campaign for Better Transport and many others who support the transition to EVs.
The group warns that EV drivers without home charging are facing an unfair burden which will undermine the Government’s levelling up and cleaner air targets, and create a barrier to further EV adoption.
32% of consumers surveyed by Auto Trader last year cited the expense of public charging as a key barrier to owning an electric vehicle.
Certain charge point operators [CPOs] including E.ON have committed that any VAT cut would also provide an important benefit to EV drivers and could be passed on to motorists almost immediately.
Quentin Willson, FairCharge Founder, motoring journalist:
“If the Government is serious about wider EV adoption, they must revisit this out-of-date VAT legislation – written in the early 1990s before the arrival of electric cars – and make it fit for purpose. The cost to The Treasury would be very small compared to the hundreds of billions spent supporting fuel duty, but the benefit to EV drivers without private parking and to urban air quality would be significant and remove this unnecessary barrier to EV adoption”
Dev Chana, MD E.ON Drive Infrastructure:
“Taxing EV drivers four times as much for using public chargers is effectively a tax on people who don’t have a driveway A fairer system which charges the same rate of VAT wherever and whenever you charge your electric car would be a real consumer win during this cost-of- living crisis and would also help speed up EV adoption by taking away an unnecessary and unfair cost.”
Ian Plummer, Commercial Director at Auto Trader:
“It is simply unfair that EV owners without driveways should have to pay more for the privilege of improving air quality. Its time for the Treasury to address this injustice and give electric vehicles the best chance of widespread adoption, rather than remaining the preserve of the wealthy.”
1Savings per 1,000 miles, analysis of 31 EVs and 31 ICE Vehicles using Zapmap Price Index and Octopus energy off-peak at home charging. Gov.uk petrol/diesel cost source. January 2024. Annual mileage calculated at 6,600 as per DfT data from 2022.