EV operators plead with Chancellor cut VAT for public charging network

3 minute read|22nd Sep 2022

Electric vehicle (EV) chargepoint operators have urged the Chancellor Kwasi Kwarteng to cut VAT on public charging following a rise in prices across the UK.

In partnership with EV campaign group FairCharge, 23 CEOs and senior figures from some industry-leading businesses have signed a letter urging Kwasi Kwarteng to make the “simple, relatively low-cost intervention” as the rise in electricity prices “threatens consumers’ willingness” to switch to EVs.

Drivers who cannot charge at home because they do not have off-street parking pay four times more tax for electricity when using public chargepoints.

VAT on domestic electricity is 5%, whereas motorists using on-street chargers pay 20%.

The letter stated: “We write to highlight the severe threat that high and volatile electricity costs are having on the Government’s stated ambitions to decarbonise transport with the switch to electric vehicles and your ambitious plans for the development of a comprehensive public charge point network.”

It continued by urging urged the Chancellor to take urgent action to tackle the issue: “One quick solution, that is totally within your control, is to heed the Fair Charge campaign’s call for an immediate cut in VAT on the electricity delivered by our networks.

“Such a cut would immediately feed through to a reduction in prices. Further, it would show the strength of the Government’s continued commitment to transport decarbonisation.”

The 23 signatories collectively believe that high electricity costs were having “material impacts on future investment plans for public charging infrastructure” and warned that, absent Government intervention, “the roll out of the public charging network will stall”.

In the latest data released from the Society of Motor Manufacturers and Traders (SMMT), there are further worrying trends for the industry.

In the seven months to the end of July 2022, 127,492 new electric vehicles hit the road in the UK – up 50% on the same time a year earlier.

However, according to Zap-Map, over the same seven-month period, just 4,832 public charge points were added to the UK’s charging network.

That means that for every 26 new cars hitting the road this year, only one new charger has been installed. Currently this is far off the EU-recommended level of 10 new EVs for every electric new charger.

Quentin Willson, Founder, FairCharge, commented: “FairCharge have organised this letter to the Chancellor because we believe that the Treasury needs to act now on EV charging costs.

“This is a critical moment in the transition to electric cars and the government mustn’t be allowed to unintentionally sabotage this transition. It’s also huge opportunity for this new Government to prove its green credentials and show it is serious about Net Zero.”

RAC electric vehicle spokesperson Simon Williams said: “Charge point operators have had no choice in recent months but to increase their charges to reflect the enormous increases in the wholesale cost of electricity, and this is something we could well see worsen in the next few months. Cutting the 20% VAT rate on public chargers to match the 5% charged on domestic electricity would cost the Government little in the grand scheme of things and is absolutely the right thing to do.

“What’s more, it would be those drivers who depend on the public charging network – including those who can’t charge at home – who would benefit the most, helping to end the current inequity between those with driveways and those without.”