A new report from This Is Money suggests there could be positive news on the horizon for electric car owners, particularly those who rely on public charging rather than charging at home.
According to the article, Chancellor Rachel Reeves is considering a cut to VAT on public electric vehicle charging, potentially reducing it from the current 20% rate to 5%. The move is reportedly being explored amid concerns that demand for electric vehicles could slow in the coming years, especially with plans for a future pay-per-mile road tax for EVs.
At present, EV drivers who charge at home benefit from the lower 5% VAT rate on electricity, while those using public chargers pay 20% VAT — a difference that has long been criticised as unfair, particularly for drivers without off-street parking. The article highlights fears that without changes like a VAT cut, EV uptake could stall as running costs rise and new road-tax style charges are introduced in the future.
The report frames the possible VAT reduction as a way to soften the financial impact of upcoming motoring taxes and keep electric vehicles attractive to drivers who might otherwise reconsider switching away from petrol or diesel.
DM News Commentary
If this VAT cut does happen, it would be a genuinely welcome step — especially for drivers who depend heavily on public charging, including many taxi and private hire drivers, rideshare drivers, and urban motorists living in flats.
For the private hire trade in particular, public charging costs can be a major operational expense, and the current VAT imbalance has always felt outdated. Cutting VAT to 5% wouldn’t solve everything — especially with pay-per-mile charging looming — but it would at least level the playing field between home and public charging.
The bigger question is whether this is early political signalling or a firm policy direction. EV drivers have heard promises before, so many will be waiting to see real confirmation before celebrating. Still, compared to constant talk of new taxes and charges, this is one of the more encouraging EV headlines in a while.
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