Yes, you read that right – in one of his first acts as Prime Minister, Andy Burnham is slashing the price of EV charging. Don’t get too excited, though, as he’s not cut VAT on public chargepoints like many have asked for; Keir Starmer’s successor is instead making domestic electricity exempt from VAT, saving the average electric car driver anything between 24p and 78p per charge.
“Westminster has not been working for people for too long, with families struggling with the cost of living,” Prime Minister Burnham said in a statement. “We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
Currently, domestic electricity is charged at a VAT rate of five per cent – a quarter of what those using public charging infrastructure have to pay. The new measure of scrapping VAT for home electricity will come on the 1 October, effectively cancelling out any rise in the revised Ofgem energy price cap which also comes into force that day.
How much will EV drivers save?
Based on the current July to September price cap of 26.11 pence per kilowatt-hour, someone charging the UK’s best-selling EV, the Tesla Model Y, would save around 78 pence per charge. On the other hand, someone charging at the typical off-peak EV tariff rate of eight pence per kilowatt-hour would save around 24 pence. Over the course of a year and the typical 7,100 miles the average driver travels per year, this translates to savings of £17.64 and £5.43 on charging respectively – if you match the car’s claimed WLTP range, that is.
| EV | 7,100 miles @ off-peak rate minus VAT (7.6p) | 7,100 miles @ energy price cap rate minus VAT (24.8p) |
| Tesla Model Y RWD (60kWh) | £5.43 | £17.64 |
| Renault 5 Comfort Range (52kWh) | £5.86 | £19.05 |
| Audi Q4 e-tron Performance (77kWh) | £6.21 | £20.19 |
| Fiat 500e Urban (24kWh) | £5.78 | £18.77 |
It’s worth pointing out, though, that the above is based on the current energy price cap; the maximum energy providers will be able to charge for electricity will almost certainly be higher in October, so the theoretical savings would be even more than what we’ve calculated.
What about VAT on public charging?
Nevertheless, the new Burnham Government’s decision only widens the price disparity between domestic and public charging. CEO of electric car owner advocacy group EVA England, Vicky Edmonds, said: “Cutting VAT on household energy bills is welcome news. For EV drivers who charge at home, it will make cars that can already save them thousands of pounds even cheaper to run.”
