- A new judgement from the UK’s tax tribunal has opened the door for a potential reduction in VAT on public charging, from 20% to 5%.
- This move, depending on HMRC’s own ruling, may well bring the tax on public charging in line with that of domestic charging, which could significantly reshape the cost of going electric for drivers without access to home charging on cheap domestic electricity.
- The case was brought forward by charge point provider Charge My Street, alongside Deloitte.
Will the UK cut public charging VAT?
The ruling referenced existing UK VAT rules, which state that ‘small-scale’ supplies of electricity can qualify for the reduced 5% rate, so long as the amount supplied to each individual customer does not exceed 1,000 kWh per month at a given charging location. Given that the average EV in the UK travels around 800 miles per month, it’s extremely unlikely that the vast majority of public charger users would exceed this monthly 1,000 kWh cap at one location – clarifying that in principle, supplies of public EV charging should attract the lower 5% rate rather than their current 20% rate.
While the ruling is an important step following the years of industry calls to cut VAT on public charging, it is still not law – and HMRC still has the opportunity to appeal the decision. If the ruling is implemented nationwide, however, it would mark one of the most impactful policy shifts for the UK EV sector, and could encourage even more drivers to make the switch to electric ahead of the ZEV mandate. It would be particularly of benefit for drivers unable to access private domestic EV charging, offering solutions such as on-street chargers a new lower cost.
Dr Will Maden, Director at Charge My Street, commented on the judgement:
“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.”
Daniel Barlow, Tax Partner at Deloitte, explains further:
“The First-tier Tribunal found that, under existing UK law, drivers should be charged the 5% reduced rate of VAT when charging their electric vehicles at any public charging facility. Specifically, the Tribunal interpretated the de-minimis provision in Note 5(g), Group 1, Schedule 7A, VAT Act 1994 as applying the 5% reduced rate of VAT to supplies of electricity at public EV charging locations where the amount of electricity supplied is below 1,000 kilowatt hours per month per customer at each location.”
