At present, electricity used for home charging is subject to 5% VAT, while public charging carries the standard 20% rate. Industry figures argue this difference is creating a two-tier system that disproportionately affects drivers who rely on public infrastructure.
Government data shows that around one third of UK households do not have access to off-street parking. This leaves millions dependent on public charging, where costs are higher due in part to the VAT differential.
Ginny Buckley, the chief executive of Electrifying.com, said:
“Government research shows around a third of UK households don’t have off-street parking, meaning millions of drivers will depend on public charging. Yet they’re the ones paying the highest price.
“Government research shows around a third of UK households don’t have off-street parking, meaning millions of drivers will depend on public charging. Yet they’re the ones paying the highest price.
“Even with today’s energy prices, charging at home can cost as little as 1.8p per mile, but if you rely on public charging that can rise to around 18p per mile – ten times as much and often more than running a petrol car. Public charging is taxed at four times the rate of electricity at home, which simply isn’t fair.
“The late Quentin Willson did brilliant work highlighting this problem and pushing for change, but it still hasn’t been fixed. If the Government expects car makers to hit the EV sales targets it’s set for the industry, it should at least fix a tax system that penalises drivers who don’t have a driveway.”
The UK has set targets to accelerate the transition to electric vehicles as part of its wider decarbonisation strategy. Industry stakeholders say that without adjustments to tax policy, adoption risks slowing, particularly among drivers facing higher running costs.
The issue is also being raised against the backdrop of wider cost-of-living pressures and energy pricing. While fossil fuel users continue to benefit from reduced fuel duty, EV drivers remain exposed to electricity price fluctuations, especially when charging outside the home.
Delvin Lane, CEO of InstaVolt, said:
“The UK charging network is growing rapidly and giving drivers the confidence to go electric. But tax policy needs to keep pace with the transition.
“Reducing VAT on public charging would immediately improve fairness and support more drivers making the switch.”
“The UK charging network is growing rapidly and giving drivers the confidence to go electric. But tax policy needs to keep pace with the transition.
“Reducing VAT on public charging would immediately improve fairness and support more drivers making the switch.”
The UK’s public charging network has expanded significantly in recent years, supported by a mix of private investment and government funding. This expansion is considered essential to meeting emissions reduction targets and supporting the planned phase-out of internal combustion engine vehicles.
Despite this progress, cost parity between electric and conventional vehicles remains a key factor influencing consumer decisions. Industry representatives argue that the VAT structure is undermining efforts to create equal conditions for all drivers, particularly those unable to access lower-cost home charging.
There are also concerns about the broader policy signal being sent to consumers. Stakeholders suggest that maintaining incentives for petrol and diesel use while imposing higher tax rates on electric charging creates mixed messaging at a time when low-emission transport is a stated priority.
Ben Nelmes, CEO, New AutoMotive, said:
“Electric car drivers shouldn’t be left exposed to rising energy costs. Yet households with EVs sit outside the price cap and will feel the impact of higher bills first. With 1.8 million EV drivers now on UK roads, this is no longer a niche issue. The Chancellor should act to ensure these households are protected from the knock-on costs of the Middle East conflict.”
“Electric car drivers shouldn’t be left exposed to rising energy costs. Yet households with EVs sit outside the price cap and will feel the impact of higher bills first. With 1.8 million EV drivers now on UK roads, this is no longer a niche issue. The Chancellor should act to ensure these households are protected from the knock-on costs of the Middle East conflict.”
The number of EVs on UK roads has grown rapidly, reaching approximately 1.8 million. As adoption increases, industry groups say the challenges facing EV drivers require attention at the same level as those affecting traditional fuel users.
Campaign organisations have also raised concerns about the potential impact on long-term behaviour. They warn that perceived unfairness in charging costs could discourage uptake, particularly among lower-income households and those living in rented accommodation.
Warren Ryan Phillips, Campaign Lead, FairCharge, said:
“It’s hard to justify a system where drivers who’ve switched to electric can end up paying more tax to charge than petrol drivers pay to fill up. If the Government is going to keep insulating petrol and diesel from global price shocks through a fuel duty cut, it should show the same fairness to EV drivers by reducing VAT on public charging. Otherwise we risk discouraging the very shift we need.”
“It’s hard to justify a system where drivers who’ve switched to electric can end up paying more tax to charge than petrol drivers pay to fill up. If the Government is going to keep insulating petrol and diesel from global price shocks through a fuel duty cut, it should show the same fairness to EV drivers by reducing VAT on public charging. Otherwise we risk discouraging the very shift we need.”
The debate over VAT reform reflects wider questions about how fiscal policy aligns with climate and transport objectives. As the UK continues its transition towards net zero, the role of taxation in shaping consumer behaviour remains a central consideration.
Industry leaders maintain that reducing VAT on public charging would offer an immediate and targeted intervention. By narrowing the cost gap between home and public charging, they argue it would improve access, support adoption, and address concerns around fairness within the EV market.