Prime Minister Andy Burnham has confirmed that VAT on household electricity bills will be cut from 5% to 0% from 1 October, in a move that will make charging an EV at home noticeably cheaper for drivers who have a driveway or home charger.
Announcing the policy as one of his first acts in office, Burnham said the aim was to give people financial breathing space and put more money back in their pockets. The government estimates the cut will save the average household around £45 a year on energy bills, running through to March 2027. For EV owners specifically, industry estimates suggest the change could shave somewhere in the region of £8 to £25 a year off the cost of charging at home, depending on mileage and tariff.
The catch is that the cut only applies to domestic electricity. Public charge points will continue to be taxed at the standard 20% VAT rate, meaning the gap between the cost of charging at home and charging on the public network has just got wider rather than narrower. That’s despite a First-tier Tribunal ruling back in February that the reduced 5% domestic rate should also apply to public charging — a ruling HMRC has since appealed, with no changes to public charging VAT confirmed. Vicky Edmonds, CEO of EVA England, welcomed the domestic cut but said the switch to electric transport can’t be fair while some drivers pay substantially more simply because they don’t have off-street parking.
For taxi and private hire drivers weighing up a switch to electric, this is worth factoring in directly. Those with a driveway or home charger stand to benefit from cheaper running costs from October, while drivers who rely entirely on public charging networks — often the case for those without off-street parking — won’t see any change to their costs at all.
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