EV owners without driveways are set to be stung with double taxation from 2028 - a pay-per-mile electric car road tax and a public charging VAT tax, which threatens Britain's EV transition.
HMRC is currently fighting to keep VAT on public EV charging at 20 per cent, which compares to the 5 per cent rate applied to home charging, despite a tribunal ruling earlier this year that the higher rate was unlawful and drivers had been overcharged for years.
Now analysis from charge point operator Be.EV shows the average UK EV driver who is entirely reliant on public charging currently spends an average of £1,349 a year in charging costs – a blend of standard and rapid charger usage.
The Government can reduce this by £169 a year, if it commits to reducing VAT to 5 per cent and operators pass on the savings.
Approximately £225 of the £1,349 the average public charging EV driver pays is VAT charged at 20 per cent, meaning drivers without home chargers have to pay more than 12 times the £18 an EV driver who charges at home does.
When Rachel Reeves's eVED 3p-per-mile charge comes into force in 2028, EV drivers will also pay an average of £242 a year in tax which Be.EV says is, 'in the purest sense, a poverty tax from the Labour government'.
EV owners who are reliant on the public network will be taxed twice from 2028 when pay-per-mile comes in, if the government doesn't cut VAT on public charging to 5%
How much would a reduction in VAT save EV owners who charge at home?
If pay-per-mile is implemented today, drivers reliant on public charging would pay an average of £1,591 a year in charging (a blended average of 65p/kWh of standard and rapid at 20 per cent VAT based on ZapMap's pricing) and PPM combined.
Electric VED is set to raise a predicted £1.9billion for the Government's coffers by 2030 to fill the £40billion fiscal black hole created by the switch to EVs and the loss of motoring taxes including fuel duty.
A driver with a home charger pays £615 for the same mileage in the same car (an EV averaging 3.88 miles/kWh), with the £975-a-year difference the harsh reality of not having a driveway.
Be.EV has worked out that the annual charging bill for those reliant on pavement charging will fall to around £1,180 if VAT is cut.
Be.EV says not reducing VAT to 5 per cent keeps these drivers in a double-taxation trap, especially as the Government's own estimate puts the cost of the VAT reduction at only £85m a year – a small fee for a measure that would materially accelerate the 2030 EV transition by making it more affordable to more people.
Asif Ghafoor, chief executive of Be.EV, said: 'The Government has told us it wants to cut the cost of going electric. It has told us it wants to reach the people who haven't yet made the switch.
'But it is fighting in court to keep a tax on public charging that a judge found was unlawful – because cutting it would expose how little PPM actually raises from the drivers who need it most.
'The maths is simple: £85million a year to fix a system that is actively penalising the people the 2030 transition depends on. That is not a difficult decision.'
