Treasury urged to stop ‘unfair’ VAT policy on public electric car charging

VAT on domestic electricity is 5% whereas motorists using on-street chargers must pay 20%.

02 February 2022

The Treasury has been urged to stop making electric vehicle (EV) drivers who cannot charge at home pay four times more tax for electricity from public chargepoints.

VAT on domestic electricity is 5% whereas motorists using on-street chargers must pay 20%.

FairCharge, a new campaign to remove barriers to the transition to electric cars, described the policy as “unfair”.

It is being led by automotive journalist and former Top Gear presenter Quentin Wilson, who co-founded fuel price lobby group FairFuelUK in 2010.

Cars using public chargeponts
VAT on electricity from public chargepoints is 20% (John Walton/PA)

He said owning an EV must be “affordable and practical for hard-pressed families and businesses”, but some Government decisions “have done nothing to help expand EV use beyond the wealthy”.

He continued: “If we are going to increase EV uptake, then we need to have far-sighted, fair Government policies that make EVs appealing to everyone.

“One of FairCharge’s first missions is to stop those who use public chargepoints having to pay VAT at 20% in stark contrast to the 5% rate on domestic electricity for those who are fortunate enough to be able to charge at home.

“This isn’t just unfair, it’s a policy mistake that will hinder EV take-up and impact on exactly those who we want to see enjoy the benefits of an EV.”

FairCharge is also calling for other measures to boost the switch to electric motoring, such as:

High-speed public chargepoints across the UK.

Low-cost funding options for new and used EVs so they can be driven by the widest socio-economic groups possible.

Education of consumers to dispel “myths” around EVs and promote new incentives for adopting the vehicles.

More than 74,000 people have signed an online petition by FairCharge urging Chancellor Rishi Sunak and Transport Secretary Grant Shapps to “make electric vehicles fairer and more affordable before it’s too late”.

A Treasury spokesman said: “The UK is leading the way on the transition to net zero – and has reduced emissions faster than any other country in the G20 and continues to have the most ambitious climate targets for 2030.

“To drive the UK’s move to electric vehicles, we have provided over £2.5 billion to cut down purchase costs for drivers and to build the necessary infrastructure to support their usage, such as local on-street residential charging and targeted plug-in vehicle grants.”

The sale of new petrol and diesel cars and vans will be banned in the UK from 2030.

Figures from the Society of Motor Manufacturers and Traders show plug-in vehicles accounted for more than one in six new cars registered in the UK last year.

The RAC, which is supporting FairCharge, said a survey it commissioned last year indicated that 38% of drivers would not be able to charge an EV at home.

The poll also suggested 63% of motorists do not think there are enough public chargepoints, and 57% who are not likely to opt for an electric car say it is because they cost more than similar petrol and diesel models.

RAC director of EVs Sarah Winward-Kotecha said: “The UK’s journey to zero-emission driving is now well under way, but it’s vital that the switch to electric happens as quickly and efficiently as possible.

“There are many issues with public chargers such as cost, availability, reliability, speed of charging and ease of payment, which have the potential to either accelerate or slow down EV adoption depending on how they are handled.

“Our decision to support FairCharge is all about making sure that charging provision in all shapes and forms is both fit for purpose and fair.”

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