Experts have debated whether Andy Burnham should intervene immediately to slash VAT on electricity bills, a move that could affect how many people make the transition to electric vehicles.
Just hours after being confirmed as the UK’s next Prime Minister, Andy Burnham announced plans to cut taxes on energy bills from October 1.
VAT on electricity bills is being removed and funded by the cancelled digital ID programme in a bid to “put more money in people’s pockets and bring back hope”.
This is being introduced ahead of October to combat the next Ofgem price cap change, after the cap was hiked by 13 per cent between July 1 and September 30, 2026.
Andy Burnham stressed that he wanted to “give people breathing space” with immediate action expected to take £45 off the yearly Ofgem price cap in October.
The move has been met with support from experts who say it will act as a lifeline for people who continue to struggle with the cost of living crisis.
Drivers are currently charged five per cent to charge their electric cars at home, compared to a 20 per cent VAT rate when charging EVs in public.
John Lewis, CEO of char.gy, said Mr Burnham’s decision to cut VAT rates was a “welcome move” to make EV charging even more affordable at home.
However, he warned that it could have a negative influence on the VAT system attributed to home and public EV charging.
Mr Lewis said: “Drivers who rely on public charging, often because they don’t have a driveway, will still pay 20 per cent VAT for exactly the same electricity.
“If Government is serious about making the EV transition work for everyone, the next step has to be equalising VAT on public charging. The electricity is the same. The tax treatment should be too.”
Earlier this year, a tribunal found that the public charging VAT rate should be five per cent, although HMRC has appealed against the ruling.
A spokesperson said the standard rate of VAT applies to electricity supplied through public EV charging infrastructure, prompting the decision to appeal.
Tanya Sinclair, CEO of Electric Vehicles UK, said cutting VAT on home charging “entrenches one of the biggest inequalities” in the switch away from petrol and diesel vehicles.
She continued, saying: “Millions of drivers without off-street parking have no choice but to pay 20 per cent VAT when charging in public, while those with a driveway will now pay none at all.
“If this Labour Government is serious about a fair transition, it cannot ask EV drivers to pay different prices for the same electricity simply because of where they live.”
This was echoed by Vicky Edmonds, CEO of EVA England, who said that millions of drivers would not be able to reap the rewards of the VAT cut since they do not have a driveway.
She stressed that the Government’s upcoming Cost of Public Charging Review must deliver “real structural reform” to cut costs at public chargers.
Ms Edmonds added: “That means tackling the significant taxes, levies and electricity costs faced by chargepoint operators and ensuring savings are passed directly on to drivers.
“The transition cannot be fair while people pay substantially more simply because they cannot charge at home.”
