‘Disappointing’: Plans to cut VAT for electric car chargers rejected – ‘massive blunder’
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The Government has ruled out cutting VAT by five percent on electricity for public electric vehicle charge points. If it had been reduced to five percent, it would have matched the rates that homeowners benefit from with their own charge points.
It is estimated that about 40 percent of households do not have access to off-street parking or are in rental accommodation so are not able to charge their electric vehicle (EV) at home.
However, Helen Whately, Exchequer Secretary to the Treasury, said that the Government has “no plans” to review the current rate of VAT applied to charging EVs.
In a written response to Conservative MP Stephen Metcalfe, Whately said that to “keep costs down for families”, the supply of electricity for domestic use attracts the reduced rate of VAT at five percent.
She added: “The Government has not specifically introduced a reduced rate for charging EVs at home.
“However, the practical challenges of differentiating between the electricity used at home for general domestic purposes, and electricity used to charge EVs currently mean that the reduced rate is effectively being applied to EV home-charging.”
Electricity supplied at EV charging points in public places is subject to the standard rate of VAT which is 20 percent.
Applying the reduced rate of VAT to electricity supplied at EV charging points in public places would “come at a cost”, she added.
Nicholas Lyes, head of roads policy for the RAC, commented on the news, saying the Government should reconsider their decision.
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He said: “It’s disappointing the Government appears to be closing the door on fairer taxation for electric vehicles.
“The real issue is that those EV owners without driveways will be hugely dependent on public chargepoints, so it cannot be fair they are effectively being hit with a much higher rate of taxation than those that can charge at home.
“If the Government wants to make electric vehicle ownership truly universal, it needs to rectify this anomaly quickly.”
VAT makes a significant contribution towards the public finances, raising around £130 billion in 2019 and 2020, and helps fund the Government’s priorities including the NHS, schools, and defence.
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