REVEALED: £115 ‘stealth tax’ on EV drivers without driveways
New data released today shows that the Treasury is collecting a ££115 ‘Stealth Tax’ every year from electric vehicle (EV) drivers without access to off-street parking at home.
VAT is charged at a 20% rate for public EV charging but is charged at a 5% rate for charging at home, in line with other domestic energy consumption.
The analysis carried out by the FairCharge campaign, using Zap-Map data shows that the total VAT paid by the average EV driver without off-street parking in a year is £185. In contrast, the annual VAT liability of someone with access to charging at home is £70, leaving a £115 annual penalty for drivers who don’t have off-street parking.
Almost four-in-10 drivers (38%) say they can’t charge at home – because they only have on-street parking or a parking space where they are unable to use a charger, or because they rent their home and a charge point isn’t installed.
The analysis is based on Zap-Map utilisation data from 60 per cent of all chargers in the UK in January and February. Prices were calculated for pay-as-you-go rates available to all drivers, leaving out products that involve membership discounts for regular users and also the subset of chargers which are still free to use. Also excluded are taxi-only devices.
FairCharge, a grassroots campaign with over 80,000 supporters headed by motoring journalist and EV advocate Quentin Willson, and which is seeking to ensure the benefits of the EV revolution are available to all, has been leading efforts to have VAT on public charging reduced to 5% to equalise costs with the rate for home charging.
Over a year, EV drivers with off-street parking pay only £456, but those who don’t pay around £1,110. This is because, in addition to the VAT differential, consumers benefit from lower electricity prices at home, with average home electricity tariff’s around 20p per kWh, whereas the average cost of electricity purchased from public charging for January and February calculated by Zap-Map was 41.2p per kWh.
In addition EV drivers can further benefit from low-cost deals by charging at off-peak times over night or getting electricity from solar panels. For instance, about 60,000 drivers use the Octopus Go tariff costing 7.5p per kWh from 12.30am-4.30am.
By axing this Stealth Tax, the Chancellor would only lose a relatively small £18.4 million in additional revenue yet incentivise millions of polluting combustion car drivers to make the switch to electric.
FairCharge spokesperson Quentin Willson commented:
“It is not right that EV drivers who don’t have driveways and garages are paying £125 more tax a year, simply because of an historic piece of VAT legislation – introduced well before anyone was thinking about the EV revolution. If the Government’s stated ambition is mass adoption of EVs, this VAT regime is at best confusing messaging and at worst a policy blunder. It’s certainly a massive disincentive for wider adoption."
“If the transition to electric vehicles – and to net zero more widely – is to be successful then it must be fair and accessible to all. This is exactly what our FairCharge campaign is trying to achieve.”
“We are calling on the Treasury to equalise the VAT rate at 5% for all EV charging for both public and home charging. We expect the Chancellor to use his upcoming Spring Statement to make the common-sense and logical change.”