Electric vehicle owners charging on their home driveways could see costs drop to an estimated 1.52p per mile following a proposed VAT cut on domestic electricity announced by Prime Minister Andy Burnham.
Home EV Charging Costs Drop Under New VAT Policy
Charging an electric vehicle at home is already significantly cheaper than using public infrastructure. According to tariff data from Octopus Energy, motorists using the Intelligent Octopus Go tariff can access night rates of 8p per kWh between 11:30 pm and 5:30 am. Even with Ofgem’s price gap rising by 4% on October 1, this specific tariff remains fixed at 8p per kWh.
For an electric car equipped with a 100kWh battery providing a 500-mile range, a full charge costs £8, translating to roughly 1.6p per mile. According to policy details released by Andy Burnham, the removal of the 5% domestic electricity VAT will automatically apply to fixed-rate tariffs like this one, potentially lowering running costs further to 1.52p per mile if providers pass the savings directly to consumers.
The Growing Divide Between Home and Public Charging
While driveway owners stand to benefit from the tax relief, the policy has drawn sharp criticism from industry groups over the existing inequality in the UK’s electric vehicle transition. Tanya Sinclair, chief executive of Electric Vehicles UK, stated that the announcement “entrenches one of the biggest inequalities in the UK’s EV transition,” noting that millions of drivers without off-street parking must pay a 20% VAT rate at public chargers.
Siobhan Doyle, a consumer writer at Carwow, echoed these concerns, telling the Press Association that eliminating VAT exclusively on domestic electricity “highlights the growing divide in EV ownership.” Similarly, RAC head of policy Simon Williams urged the Prime Minister to consider lowering public charging VAT so that drivers without driveways can adopt electric vehicles more affordably.
Pro Tip: Scheduling Your EV Charges
According to Carwow, most modern electric vehicles and home wallboxes allow owners to schedule charging sessions. Setting your car to charge during off-peak hours—such as the 11:30 pm to 5:30 am window on specialized tariffs—maximizes your savings, which will be enhanced further once the domestic electricity VAT is removed.
Frequently Asked Questions
When does the VAT cut on domestic electricity take effect?
The 5% VAT on domestic electricity will be removed for six months starting October 1.
How much will it cost to charge an EV at home after the VAT removal?
Drivers using cheap off-peak tariffs like Intelligent Octopus Go could see per-mile costs drop from approximately 1.6p to 1.52p.
Do public EV chargers qualify for the VAT reduction?
No. Public EV charging remains subject to the standard 20% VAT rate, which has drawn criticism from industry advocates representing drivers without off-street parking.
What are your thoughts on the new VAT changes for electric vehicle owners? Join the conversation by leaving a comment below, share this article with fellow motorists, or subscribe to our newsletter for the latest updates on motoring policy and EV running costs.
Related reading