Andy Burnham’s VAT plan could help EV drivers at home (Image: Getty)
Andy Burnham’s new VAT cut on electricity set to take effect from October could drive the cost of charging an electric car on your driveway down to as little as 1.52p per mile. This morning, the new Prime Minister announced that VAT on electricity, currently set at 5%, is set to be removed from bills from October 1 in a bid to tackle the cost of living crisis.
EV drivers can currently charge their cars on the driveway for as little as the equivalent of 1.6p per mile if they are on cheap EV tariff Intelligent Octopus Go. Octopus’ EV tariff allows drivers to charge their car from 8p per kWh at night.
For an EV with a 100kWh battery, it would cost £8 to charge. With a range of 500 miles, that makes 1.6p per mile.
But the removal of VAT from electricity could drop this as low as an estimated 1.52p per mile, should Octopus pass on the VAT savings to customers fixed to this tariff.
Andy Burnham today announced that the VAT cut will automatically apply to tariffs which are already fixed, not just for households on the standard price cap or those taking new deals.
Car selling website Car Wow explains: “Electricity providers don’t always charge the maximum under the price gap, especially for customers who switch to a tariff that’s designed for EV drivers.
“These tend to bring significantly lower prices at night, and with most EVs (and many home wallboxes) being able to schedule charging sessions based on owner preferences, it is easy to take advantage of these off-peak prices.”
But critics have already hit out at the new Prime Minister’s VAT changes, arguing that it increases the gap between cheap charging at home and expensive public charging even further.
VAT on domestic electricity will be cut from 5% to 0% from October 1, which is Andy Burnham’s first significant policy announcement as Prime Minister.
This will benefit drivers who charge their EVs at home, whereas those who rely on public charging – typically those without off-road parking where they live – will continue to pay 20% VAT.
EV lobby groups have long warned that the difference risks reducing the switch to electric motoring among lower income households.
Tanya Sinclair, chief executive of Electric Vehicles UK, said the new Prime Minister’s announcement “entrenches one of the biggest inequalities in the UK’s EV transition”.
She told the Press Association: “Millions of drivers without off-street parking have no choice but to pay 20% VAT when charging in public, while those with a driveway will now pay none at all.
“If this Labour Government is serious about a fair transition, it cannot ask EV drivers to pay different prices for the same electricity simply because of where they live.”
Siobhan Doyle, consumer writer at Carwow, said eliminating VAT on domestic electricity “highlights the growing divide in EV ownership”.
She said: “If the Government wants to make electric vehicles truly accessible and fair for everyone, equalising public and home charging VAT remains the crucial missing piece of the puzzle.”
RAC head of policy Simon Williams said: “We urge the new Prime Minister to give serious consideration to lowering VAT on public EV charging, so that those without driveways can make the switch to electric motoring more affordably.”
