Prime Minister Andy Burnham's first official act, a six-month Value Added Tax (VAT) cut on domestic electricity bills beginning October 1, is set to widen the cost gap for electric vehicle (EV) owners in the United Kingdom. While the measure aims to provide financial relief to households facing rising energy prices, it disproportionately benefits those with off-street parking, leaving an estimated nine million households without driveways to bear higher charging costs.
The VAT cut will reduce the rate on household electricity from 20 percent to 5 percent, a move intended to offset the anticipated increase in the Ofgem energy price cap. For EV owners who can charge at home using a wallbox connected to their domestic tariff, this will significantly lower their running costs. For example, charging a 100kWh EV battery from empty to full could drop from an estimated £26.11 to a lower figure, reflecting savings of between 24p and 78p per charge.
However, drivers who lack a driveway and rely on public charging stations face a different reality. The current average cost to charge an EV using the public network is around 83p per kWh, meaning a full charge for a 100kWh battery could cost approximately £81. This rate is subject to a 20 percent VAT, which will remain unchanged by Burnham's announcement. Industry experts argue that this disparity highlights an unfair system, where the same electricity incurs different tax rates depending on the charging location.
"The Government's Cost of Public Charging Review must now deliver real structural reform to bring down prices at the chargepoint," said Vicky Edmonds, CEO of electric car owner advocacy group EVA England. "But millions of EV drivers without a driveway will not fully benefit because they can't easily access home charging."
John Lewis, chief executive of char.gy, echoed these concerns, stating that Burnham's tax cut "throws the unfairness of the current VAT system into even sharper focus." He added, "Drivers who rely on public charging, often because they don't have a driveway, will still pay 20 percent VAT for exactly the same electricity. If Government is serious about making the EV transition work for everyone, the next step has to be equalizing VAT on public charging."
According to recent data, approximately 67.2 percent of UK households have access to a driveway or dedicated parking space, amounting to about 19 million households. These individuals are more likely to find EV ownership economically advantageous. In contrast, the 32.8 percent of households without such facilities—around nine million—will see less benefit from the domestic VAT reduction. Current statistics from the Department for Transport indicate that nine in ten EV owners in the UK have access to home charging, while only 9 percent of the nation's EV ownership pool resides in terraced properties or flats.
Guy Bartlett, CEO of the Believ public charging network, urged for an end to this "postcode lottery," advocating to "align VAT on public charging with home energy to make EVs more affordable for everyone."