Around 200,000 drivers in the UK could be affected by the prime minister’s measure.
One of Andy Burnham’s first major cost of living measures might affect some UK drivers (Image: Getty)
Thousands of UK drivers could miss out on one of Andy Burnham’s first major cost of living measures despite the Prime Minister promising to cut household electricity bills from October. The Government has confirmed VAT will be removed from household electricity bills from October 1, reducing the rate from 5% to zero.
The move is expected to save a typical household around £45 a year, with Business Secretary Jonathan Reynolds saying it will give families some “breathing space” as energy costs remain high. However, not every household will benefit equally.
Drivers who charge an electric vehicle at home will see the cost of charging fall (Image: Getty)
Drivers who charge an electric vehicle at home will see the cost of charging fall alongside their household electricity bills, but those who rely on public charging points are set to miss out because VAT on public charging remains at 20%.
Research by consultancy New AutoMotive estimates around 200,000 electric vehicle drivers do not have access to a home charger.
The organisation says these motorists already pay around £216 a year in VAT through using public charging facilities, making them some of the hardest hit by the current system.
The difference in charging costs is already significant. According to ZapMap, drivers with a home charger typically pay around 9p per kilowatt hour, while the cheapest public chargers cost about 54p per kilowatt hour.
Ben Nelmes, chief executive of New AutoMotive, said: “The Government have handed EV drivers with a driveway a tax cut on power they were already paying least for.
“Meanwhile the driver charging on a public charger down the road, because they’ve got nowhere else to plug in, is still handing 20% to the taxman on every single mile.
Drivers who rely on public charging points are set to miss out (Image: Getty)
“That’s a design flaw, and it leaves us with a VAT system that asks most of those who can least afford to contribute.”
The organisation is calling on ministers to go further by introducing time-of-use tariffs for public charging, allowing drivers without off-street parking to benefit from cheaper overnight electricity rates.
A Government spokesperson said: “We are boosting the EV transition by saving drivers up to £3,750 off a new car, with more than 95,000 people benefitting already, and investing over £7.5 billion into the UK electric vehicle sector.
“We’re also reviewing the cost of public EV charging which will look at the impact of energy prices, wider cost contributors, and options for lowering these costs for consumers.”
The VAT reduction forms part of the new Government’s plans to ease the cost of living and will apply across England, Scotland and Wales from October 1.
The Government said the tax cut would be funded by cancelling the proposed Digital ID programme.
It estimates the VAT reduction will cost £850million during the current financial year.
The measure is due to remain in place until the end of the 2026-27 financial year, with any extension requiring future Budget decisions.