Public EV charging has just become even more expensive compared to topping up at home, with the 5% VAT discount on domestic electricity, which gives it a 0% rate, coming into force today (October 1), against the 20% rate applied to commercial power.
The domestic VAT reduction runs until March 31 2027 and makes the “driveway divide” – which sees people unable to charge at home forced to use more expensive public points – even more of an issue, warns chargepoint operator Fastned.
The firm is offering customers a £25 charging credit, equivalent to an average session at one of its public EV forecourts, to soften the blow. The Dutch company is also calling on ministers to cut VAT for electricity dispensed by public EV sockets.
Fastned charges 79p for a kWh of electricity (55p for subscribers paying £5 a month) and the firm’s £25 offer comes after MFG announced a permanent 25% discount for drivers using its Connect app to pay for charging sessions, effectively dropping the forecourt firm’s power to 59p per kWh.
Chargepoint operators have long been campaigning for the electricity they sell to be subject to a lower VAT rate than the one it currently attracts – both for commercial reasons, and because they say it unfairly penalises people who are unable to charge at home.
But authorities are not only reluctant to implement such a change, they are actively fighting to stop it: HMRC is contesting a tax tribunal that seeks to apply a 5% VAT rate to chargepoint power, with such a change projected to cost the taxman £85m a year.
Other challenges facing the sector are that that ministers are said to favour on-street low-speed chargers rather than standalone ultra-rapid facilities, while government-commissioned research published last year indicates 90% of EV drivers are able to charge at home.
