Andy Burnham has been pressured by industry experts to close the loophole (Image: Getty)
Andy Burnham’s new VAT cut on electricity set to begin on October 1 will not be passed on to drivers who charge using public charging points, experts have warned.
It means that despite the cost of running an electric car charged from a driveway dropping as low as 1.52p per mile for a high-range EV following the VAT cut, those who are forced to rely on more expensive public charging infrastructure won’t be able to benefit from the tax relief and instead will be made to pay as much as 16p per mile for running the same high range EV.
Announced earlier this week, the new Prime Minister’s VAT reduction will cut the 5% levy on electricity for household bills down to 0% for six months. But the reduction will only apply to domestic properties and not to public charge points.
The change will benefit drivers who charge their EVs at home, whereas those who rely on public charging – typically those without off-road parking where they live – will continue to pay 20% VAT.
Analysis by online vehicle marketplace Carwow suggests charging an EV at home can cost as little as £8 on one of the cheapest tariffs for EVs. It means EV drivers can currently charge their cars on the driveway for as little as the equivalent of 1.6p per mile if they are on cheap EV tariff Intelligent Octopus Go.
Octopus’ EV tariff allows drivers to charge their car from 8p per kWh at night. For an EV with a 100kWh battery, it would cost £8 to charge. With a range of 500 miles, that makes 1.6p per mile. With even a shorter range of 400 miles, that would be just 2p per mile, not including the cost of the upcoming pay-per-mile eVED scheme.
But the removal of VAT from electricity could drop this as low as an estimated 1.52p per mile, should Octopus pass on the VAT savings to customers fixed to this tariff, or 1.9p per mile for a 400-mile range.
However, Carwow sets out how the cost of public chargers works out much higher per mile.
It explains that the Ionity network charges 81p per kWh, which means that a 100kWh EV would cost £81 to charge from empty to full. A car with a 400 mile range would cost 16.2 pence per mile when charging on the network, while an EV with a range of 500 miles would cost 20p per mile.
Now industry experts are calling on Prime Minister Andy Burnham to extend the tax relief to public charging too, because of this ‘unfairness’.
John Lewis, chief executive of public EV chargepoint supplier char.gy, said the policy “throws the unfairness of the current VAT system into even sharper focus”.
He continued: “The next step has to be equalising VAT on public charging.
“The electricity is the same. The tax treatment should be too.”
EV lobby groups have long warned that the difference risks reducing the switch to electric motoring among lower income households.
Tanya Sinclair, chief executive of Electric Vehicles UK, said the new Prime Minister’s announcement “entrenches one of the biggest inequalities in the UK’s EV transition”.
Charging an EV at a public charging station will not be covered by the cut (Image: Getty)
She told the Press Association: “Millions of drivers without off-street parking have no choice but to pay 20% VAT when charging in public, while those with a driveway will now pay none at all.
“If this Labour Government is serious about a fair transition, it cannot ask EV drivers to pay different prices for the same electricity simply because of where they live.”
RAC senior policy officer Rod Dennis said in April that a rise in the number of EVs on the road is “impressive” but noted that people using public chargers “are still paying a significant premium”.
He added: “A sensible next step to further increase uptake would be to reduce VAT at public chargers, to match the rate levied on domestic electricity.”