EV drivers to save £12 per charge? Landmark VAT ruling could be huge

A landmark tribunal has declared that EV drivers using the public charging network should be eligible for reduced five per cent VAT – with the potential to slash running costs for those unable to charge at home. 

Global professional services network Deloitte, along with rural chargepoint provider, Charge My Street, has won a ‘first-tier tribunal’ questioning whether electric-car drivers should be forced to pay 20 per cent VAT when topping up away from home. Domestic electricity is currently subject to a lower rate of five per cent VAT.

In a post on LinkedIn, Deloitte legal representative, Oliver Jarratt, said: “We noticed that existing VAT law already says that the provision of less than 1,000 kWh per month of electricity to a person at any particular premises counts as “domestic” – always – so we believed the five per cent rate already should apply to public EV charging, provided it was under that limit.

“The first-tier tribunal has just given its judgement, ruling that the five per cent rate indeed applies to public EV charging in those circumstances. The judgement is clear, unequivocal and a thumping victory for Charge My Street.”

It’s understood that HMRC now has 56 days to appeal the judgement, although it’s not yet clear whether it plans to do so. Whether it does so will determine what happens next. Daniel Barlow, a tax partner at Deloitte, told Auto Express: “The judgement is important, but I don’t think it will have an immediate effect on public charging prices.

“It’s unlikely that Charge My Street or any other CPO will factor the five per cent rate of VAT into their pricing, until the ultimate outcome of the case is known.”

Daniel Heery, director at Charge My Street, confirmed as much but insisted the company is “committed to making EV charging affordable, and will take the decision into account when the Board next sets prices”.

While Charge My Street is specifically aimed at communities with restricted access to home and public charging, its vision is “for all drivers to live within a five-minute walk of a charging point so everyone can make the switch to an electric vehicle”.

If passed, the ruling could have a significant impact on the price of public charging. Using an extreme example, the cost of charging a Mercedes EQS from zero to 100 per cent via an InstaVolt rapid charger could fall by over £12. At the current price of 89p/kWh, it would cost £96.45 to fully charge the luxury limo’s 108.4kWh battery. A VAT reduction to five per cent would reduce the unit cost by 11.2 pence, saving the driver £12.14 per charge. 

Even on Charge My Street’s 36p/kWh tariff – most of its chargers are the slower 7kW type – customers could save 4.5 pence per unit of electricity, or almost £5 per charge.

Dr Will Maden, director at Charge My Street, said: “EV adoption must be both practical and affordable at a community level if the UK is to meet its Net Zero commitments. The Tribunal’s decision recognises the essential role of local, public charge points in enabling that transition. We are pleased that the ruling provides clarity for operators like us and reassurance for the people and places we serve.”

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