The UK government's recent budget includes a £100 million initiative aimed at reducing the cost burden for electric vehicle (EV) owners who cannot charge at home. However, experts warn that this funding, scheduled for allocation between 2027 and 2029, will do little to bridge the substantial annual cost gap between drivers who can charge at home and those reliant on public infrastructure.

Chancellor John Healey announced the funding, which is expected to provide an average annual saving of approximately £150 for EV drivers without off-street parking. This initiative is intended as a stopgap measure while a taskforce explores future solutions, such as allowing drivers to pay domestic electricity rates at slower public charging points.

The 'Driveway Divide'

Currently, the disparity in charging costs is significant. An EV owner covering 10,000 miles annually and charging primarily at home spends around £680 per year. In contrast, an owner without home charging access faces an annual cost of approximately £1,760, according to data from Zap-Map. This difference, often referred to as the 'driveway divide,' can exceed £1,000 per year for an estimated nine million people living in properties without dedicated parking or charging facilities.

VAT Discrepancy and Future Taxes

Further disadvantaging drivers without home charging, the government has extended the temporary removal of VAT on domestic energy until July 2027. This benefits households that can charge EVs at home. Concurrently, electricity supplied through publicly accessible and workplace EV charging points will continue to be subject to the full 20% VAT and will not qualify for domestic energy use classifications.

This decision comes despite calls from motoring organizations and EV groups to reduce VAT on public charging to match the lower rate applied to domestic electricity. Shane Brennan, chief executive of ChargeUK, criticized the budget announcements, stating they "will do serious damage to the EV transition" and that the government has "slammed the door shut on ending a rank unfairness."

Additionally, the budget confirmed details of the Electric Vehicle Excise Duty (eVED) pay-per-mile tax, set to be levied on battery-powered cars starting in April 2028. EV owners will be charged 3 pence per mile, with plug-in hybrid vehicle owners facing a 1.5 pence per mile charge, as the Treasury seeks to recover lost revenue from traditional fuel duties.