The government’s reported plan to cut VAT at public chargers has been hailed as a major breakthrough by the boss of one of the UK’s fastest-growing EV brands – but he has called for even more incentives to be brought in, including scrapping congestion charges for EVs, in an effort to drive sales.
According to The Telegraph, chancellor Rachel Reeves is readying several cuts to the cost of public charging, in response to the backlash the government faced after announcing the introduction of eVED, a pay-per-mile tax on EVs and plug-in hybrids.
This is due to come into force from 1 April 2028, but the Office for Budget Repsonsibility (OBR) has estimated that it will reduce EV sales by some 440,000 between November 2025 and March 2031, due to drivers being put off switching.
The reported measures to reverse that swing include reducing the 20% VAT rate on charging to 5% – the same levy applied to home electricity – and cutting the network charges imposed by charger providers.
Industry experts are currently in talks with the government, and one person involved in those discussions told The Telegraph that the Treasury fears eVED will “kill EV demand”. They added: “The way we convince people to switch to EVs is by showing people it is easy and it is cheap. There are savings to be had here for many people.”
In response, Polestar UK boss Matt Galvin has told Autocar that the move is “brilliant, brilliant news for those who cannot charge at home”.
According to the RAC, 35% of Brits don't have access to a driveway or some type of off-street parking, and not all of the remaining 65% will be able to install a home charger – for example, those using a shared parking area at a block of flats. The number of UK drivers unable to reap the benefits of home charging is therefore low enough to spark worry in the industry.
Public charging is consequently seen as a key area the government must address if EV sales are to rise to the levels that it has mandated (80% of the UK's total new car market by 2030).
VAT parity will mean huge savings for those without a home charger. Those who charge via a driveway wallbox presently pay around 8p per kWh, while those who use public chargers pay 54p per kWh, according to data from Zapmap.
While there are other options for those without a driveway (such as charging gullies across pavements), many of these require a guaranteed parking space outside the driver’s home, which is often unrealistic.
While the government has recently brought in incentives for EV buyers, such as the Electric Car Grant (ECG), which provides up to £3750 off the price of a new EV, Galvin said it needs to go further still.
He suggested that EV drivers shouldn't be billed congestion charges (Transport for London began doing this on 1 January) and the ECG should be extended to used EVs, which he believes would protect residual values – a growing worry for both car makers and owners.
Galvin concluded: “The messaging coming out of government is confusing. ECG was great but it is confused by PPM [pay-per-mile taxation]. With these confusing messages, it is hard for those moving towards EVs. What we need now is consistency.”
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The PPM scheme is just a bonkers thing to have launched so soon after the grants. PPM is a decent way of increasing lost revenue, but to me, would have made sense if ALL cars had to pay it, not just EVs/PHEVs. The messaging coming from this government is all over the place, its no wonder that there is so little trust or take up in sales in EVs.I say all this as someone who would like an EV, would like more take up in them, and think that for a lot of people they work. We just have a media who use outrage against them for clicks, and a government who flip flop on their messaging about them.
Whilst I can see the anomaly between the VAT rate applied to domestic electricity and that levied on public charging I'm afraid I don't see the argument that the 5% VAT rate should be extended to public charging when the standard rate is applied to fossil fuels. Speaking as an EV owner it would be fairer to charge 20% on the amount of electricity drawn through our home rapid chargers and use the extra revenue to support the huge network costs imposed on those building out and providing rapid chargers. The charging networks are incumbed with enormous standing chargers for their network connections which can only be recovered from high KWh charging rates. Furthermore, as we have seen with reductions in fuel duty prices, I am not sure that a 15% reduction in VAT would feed through to consumer prices. Alternatively why not reduce VAT on forecourt fuel to 5% and add the shortfall to excise duty on petrol and diesel. This might encourage the uptake of EVs and make drivers a bit more away that driving aggressively adds to their fuel consumption.
totally mixed messages. Have a grant to buy your car, but now pay Ved, reduce the Vat on Chargers, and add a cost per mile.
The quicker the UK adopts EVs, the quicker the taxes will go up to replace those lost from ICE. Its simple, and any short term reduction will quickly be reversed.
And all this from a pro EV government. What will happen when that changes?
People should still buy a car powered by what they like, and forget about these minor tax changes as far as i am concerned