The new Prime Minister has announced VAT on domestic electricity will be cut from 5% to 0% from October 1, potentially reducing home EV charging costs
The new Prime Minister’s proposed VAT reduction on electricity, due to come into force in October, could cut the cost of charging an electric vehicle on your driveway to as little as 1.52p per mile. Andy Burnham revealed that VAT on electricity, currently standing at 5%, is to be scrapped from bills from October 1 in an effort to ease the cost of living.
EV drivers can charge their vehicles at home for the equivalent of 1.6p per mile currently if they are on the budget-friendly Intelligent Octopus Go tariff.
Octopus’ EV tariff enables drivers to charge their vehicle from 8p per kWh overnight. For the biggest stories in Wales first sign up to our daily newsletter here
For an EV with a 100kWh battery, a full charge would cost £8. With a range of 500 miles, that equates to 1.6p per mile.
However, the removal of VAT on electricity could reduce this figure to an estimated 1.52p per mile, provided Octopus passes on the VAT savings to customers locked into this tariff.
Mr Burnham confirmed on Tuesday that the VAT reduction will automatically apply to already fixed tariffs, rather than solely for households on the standard price cap or those signing up to new deals, reports the Express.
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.”
However, critics have already criticised the new Prime Minister’s VAT changes, arguing that they widen the divide between cheaper home charging and costly public charging still 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.
Drivers who charge their EVs at home stand to benefit, while those who depend on public charging points, typically people without off-road parking, will continue to be charged 20% VAT.
EV lobby groups have long cautioned that this disparity risks discouraging lower-income households from making the switch to electric vehicles.
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.”
