UK Chancellor's EV Charging Support Falls Short of Addressing 'Driveway Divide'

The United Kingdom's Chancellor John Healey has announced a £100 million package aimed at reducing the cost burden for electric vehicle (EV) owners who lack off-street parking for home charging. However, experts warn this measure, set to be implemented between 2027 and 2029, will do little to close the substantial annual cost difference between charging at home and relying on public infrastructure.

The funding is expected to save the average EV driver without a home charger approximately £150 per year. This figure contrasts sharply with the estimated annual cost gap, referred to as the 'driveway divide,' which exceeds £1,000 for the nine million Britons living in properties without dedicated parking.

Currently, an EV owner covering 10,000 miles annually and charging primarily at home spends around £680 per year. In contrast, an owner without access to a home charger faces costs of approximately £1,760 per year, according to Zap-Map data. The new government initiative will provide £50 million in the 2027-28 financial year and another £50 million in 2028-29.

Labour has stated that the £100 million commitment is a stopgap measure. The party plans to establish a taskforce to explore a future system that would allow drivers to pay domestic electricity rates at slower public charging points.

This decision comes as the government opted against reducing VAT on public EV charging to match the lower rate applied to domestic electricity. EV experts have described this as a missed opportunity.

The government's projected £150 annual saving is based on charging costs of 6.4 pence per mile, assuming an average EV energy consumption of 0.303 kWh per mile and annual mileage of 8,000 miles. In contrast, average charging costs recorded in September show home chargers typically operate at around 8.9 pence per kWh. Public charging points, rated between 3kW and 49kW, charge an average of 54 pence per kWh, approximately six times higher.

Further disadvantaging drivers without driveways, the temporary removal of VAT on domestic energy will be extended until July 2027, benefiting those who can charge at home. Simultaneously, electricity supplied through publicly accessible and workplace EV charging points will retain a 20% VAT rate and will not qualify for domestic energy use under the Climate Change Levy.

Industry representatives have voiced strong criticism. Shane Brennan, chief executive of ChargeUK, stated that the Budget announcements "will do serious damage to the EV transition" and criticized the government for not addressing the disparity in VAT rates. Brennan also dismissed the £100 million funding package and the proposed taskforce as "too little, too complex and too slow to make a meaningful difference."

Dr. Vicky Edmonds, chief executive of Electric Vehicle Association England, noted that while EVs offer cheaper motoring for many, the savings are currently out of reach for those who cannot afford upfront costs or lack home charging facilities.

Electric Vehicle Excise Duty Details

The Budget document also provided further details on the Electric Vehicle Excise Duty (eVED), a pay-per-mile tax for battery-powered cars set to take effect from April 2028. EV owners will be charged 3 pence per mile, and plug-in hybrid vehicle owners will be charged 1.5 pence per mile, as the Treasury seeks to recoup lost revenue from traditional fuel duties.

The new system will include a tool for EV owners to estimate and declare their mileage at the beginning of each fiscal year. Alternatively, drivers can opt for automatic mileage sharing from their vehicles. The Treasury also committed to developing an automated refunds model by 2030 to simplify refunds for overestimated mileage or vehicle sales.

The Office for Budget Responsibility projects that eVED will add approximately £2 billion to Vehicle Excise Duty revenues by the 2031-32 fiscal year.