Chancellor urged to cut VAT on public charging

The Chancellor is being urged to cut VAT on public charging electric vehicle (EV) charge point operators in a letter coordinated by the FairCharge campaign.

The bosses of 23 companies signed a letter urging Kwasi Kwarteng to make the “simple, relatively low-cost intervention” as the rise in electricity prices “threatens consumers’ willingness” to switch to EVs.

Drivers who cannot charge at home because they do not have off-street parking pay four times more tax for electricity when using public charge points. VAT on domestic electricity is 5% whereas motorists using on-street chargers pay 20%.

The letter said: “We write to highlight the severe threat that high and volatile electricity costs are having on the Government’s stated ambitions to decarbonise transport with the switch to electric vehicles and your ambitious plans for the development of a comprehensive public charge point network.”

Worryingly, the charging companies said that high electricity costs were having “material impacts on future investment plans for public charging infrastructure” and warned that, absent Government intervention, “the roll out of the public charging network will stall.”

The Government’s Electric Vehicle Infrastructure Strategy states, “the private sector has a critical role to play in providing convenient, affordable and reliable charging for all.”

In the seven months to the end of July 2022, 127,492 new electric vehicles hit the road in the UK, according to data from the Society of Motor Manufacturers and Traders (SMMT), up 50% on the same time a year earlier.

Over the same seven-month period, just 4,832 public charge points were added to the UK’s charging network, according to data from Zap-Map.

That works out at about 26 new cars hitting the road for every new charger this year – far above the EU-recommended level of 10 EVs for every electric vehicle charger. 

The letter urged the Chancellor to take action: “One quick solution, that is totally within your control, is to heed the Fair Charge campaign’s call for an immediate cut in VAT on the electricity delivered by our networks. Such a cut would immediately feed through to a reduction in prices. Further, it would show the strength of the Government’s continued commitment to transport decarbonisation.”

RAC electric vehicle spokesperson Simon Williams said: “Charge point operators have had no choice in recent months but to increase their charges to reflect the enormous increases in the wholesale cost of electricity, and this is something we could well see worsen in the next few months.

“Cutting the 20% VAT rate on public chargers to match the 5% charged on domestic electricity would cost the Government little in the grand scheme of things and is absolutely the right thing to do. What’s more, it would be those drivers who depend on the public charging network – including those who can’t charge at home – who would benefit the most, helping to end the current inequity between those with driveways and those without.”

Faircharge is a grassroots campaign with over 80,000 supporters headed by motoring journalist and EV advocate Quentin Willson.