Motorists with a driveway will be affected by a new £40 rule introduced by Andy Burnham just days into his new job as Prime Minister. Mr Burnham announced plans to slash VAT rates on domestic electricity just hours into his premiership, with fees set to be cut from 5% to 0%.

However, electric car experts have warned EV owners topping-up their cars at home could be set to benefit from hefty savings under the new policy. Despite the announcement, motorists will have to wait until the Autumn to take advantage of the discounts, with the new VAT rates coming into effect on October 1.

David Martell, CEO of home charger company Andersen EV, has predicted most EV owners could save around £25 per annum, with those racking up the miles likely to save up to £40.

David commented: “For the average EV driver charging at home, the saving on charging alone is likely to be around £20–£25 per year. For higher-mileage drivers, it could be closer to £35–£40.

“That may not sound transformational on its own, but it’s the direction of travel that matters. It demonstrates a willingness to support the transition with practical measures that make a real difference to consumers.”

However, motoring experts have stressed that savings could be even higher in a massive boost to cash-strapped road users. According to Carwow, the cost of topping-up a 100kWh battery would drop from £26.11 to just £24.87 under the new system, saving road users around £1.24 per charge.

The experts stressed that road users fully charging their battery at home at least once a week could be set to save around £65 per year.

The news is set to be a blow to those without access to domestic electric car charging, with the difference between public and private plugs set to rise. VAT rates on electricity at public charging stations will remain at 20% in a blow to those without access to driveways.

Motoring experts have repeatedly called for public charging costs to fall, with the Society of Motor Manufacturers (SMMT) previously warning that VAT rates “should be reduced to align with the 5% VAT levied on home charging”.

Andy Burnham New £40 Rule Change for Anyone With Driveways – Households Have Until October

Households across Britain are being urged to understand a major change to domestic electricity charges coming into force in October, with some electric vehicle drivers potentially able to save as much as £40 a year.

The change has been described in some headlines as a new “£40 rule” affecting people with driveways. However, the reality is rather different.

There is no new £40 tax on homeowners who have a driveway.

Instead, the figure relates to the potential annual saving available to some electric vehicle owners who charge their cars at home. The saving is connected to a planned reduction in VAT on domestic electricity, which is scheduled to take effect from October 1, 2026.

The policy could therefore have an important effect on households with private parking and home charging facilities, while also raising questions about whether motorists without driveways will receive the same benefit.

What is changing in October?

The key change is a reduction in VAT on domestic electricity.

Under the new arrangement, VAT on domestic electricity is due to fall from 5 per cent to zero per cent from October 1.

For ordinary households, the direct effect will depend on how much electricity they consume. The reduction does not mean that every homeowner will suddenly receive £40.

Instead, the financial benefit will vary according to household electricity usage.

For motorists who own an electric vehicle and regularly charge it at home, however, the reduction could produce additional savings.

This is because electricity used to charge an electric vehicle at home is generally supplied as domestic electricity.

As a result, drivers with a suitable home charging point could see the cost of charging their vehicle fall once the new VAT rate comes into effect.

Where does the £40 figure come from?

The £40 figure has attracted considerable attention because it sounds like a fixed government payment or charge.

It is neither.

According to David Martell, chief executive of home-charger company Andersen EV, the average electric vehicle driver charging at home could save around £20 to £25 a year.

Higher-mileage motorists could potentially save between £35 and £40 annually.

The exact amount will depend on individual circumstances.

Someone who drives relatively few miles and charges infrequently will save less.

A driver who covers large distances and frequently charges a large battery at home could save more.

This means that £40 should be regarded as an estimate for certain motorists rather than a guaranteed saving available to every household with a driveway.

Why are driveways important?

The connection between driveways and the new rule is relatively simple.

A driveway can allow a household to install a private electric vehicle charging point.

Once a charger has been installed, the driver can charge their vehicle using domestic electricity rather than relying exclusively on public charging stations.

That means households with suitable off-street parking can take advantage of the lower VAT rate when charging their vehicles at home.

A household with a driveway but no electric vehicle would not automatically receive a £40 payment.

Similarly, someone with an electric vehicle but no home charger may not be able to benefit from the full potential saving.

The headline therefore risks creating confusion by suggesting that owning a driveway itself triggers a financial benefit.

It does not.

The important factors are the type of vehicle, the availability of a suitable home charging facility and the amount of electricity consumed.

How much could EV drivers actually save?

Previous estimates provide an indication of the possible savings.

Carwow calculated that charging a 100kWh electric vehicle battery at home could become around £1.24 cheaper under the lower VAT rate.

For a motorist charging such a vehicle approximately once a week, the annual saving could potentially reach around £65, although actual savings would depend on charging patterns and electricity consumption.

These figures demonstrate why the £40 headline should not be interpreted as a universal amount.

Some motorists could save less than £40.

Some high-mileage motorists could save more.

The actual benefit will ultimately depend on how much electricity is used for charging.

The “driveway divide”

The policy has also triggered a wider debate about fairness.

The main concern is that motorists who can charge their vehicles at home will benefit from the zero-rated domestic electricity system, while those who rely on public charging infrastructure will continue to face a higher VAT rate.

According to reports, VAT on electricity supplied through public charging points remains at 20 per cent.

This creates a significant difference.

Consider two electric vehicle owners.

The first lives in a house with a driveway and has a home charger. They can plug their car in overnight and benefit from the lower domestic electricity VAT rate.

The second lives in a flat or terraced property without private parking. They may have to use a public charging station and continue paying the higher VAT rate.

Both drivers own electric vehicles, but their charging costs could therefore be affected differently by the tax system.

This has led some industry figures to describe the situation as a potential “driveway divide”.

Why public charging matters

The issue is particularly important as Britain attempts to increase the number of electric vehicles on its roads.

Government figures published in 2025 showed that the UK’s public charging network had grown significantly, with more than 86,000 public chargers available at the time. The government also announced plans to support the installation of an additional 100,000 chargers.

The government has also recognised the difficulties faced by people without driveways.

Previous plans included measures intended to make home charging easier for renters and households without off-street parking, including support for councils installing cross-pavement charging channels.

That means the wider policy challenge goes beyond VAT.

Britain needs a charging system that works for homeowners, renters, people living in flats and motorists in densely populated urban areas.

No £40 driveway bill

Perhaps the most important point for homeowners is that there is no new £40 charge simply for having a driveway.

People should therefore be cautious about social-media posts or messages suggesting that homeowners have to pay £40 before October.

The October deadline relates to the scheduled introduction of the new domestic electricity VAT rate, not to a requirement for driveway owners to make a payment.

A homeowner does not need to register their driveway simply to avoid a supposed £40 charge.

There is also no universal £40 government payment for everyone who owns a driveway.

The figure is instead an estimate of the possible annual saving for certain electric vehicle users.

Who could benefit most?

The households most likely to see a noticeable direct benefit are those that meet several conditions.

They have an electric vehicle.

They have access to off-street parking.

They can charge the vehicle using a domestic electricity supply.

And they drive enough miles for the reduction in charging costs to become meaningful.

A high-mileage EV driver charging regularly at home could potentially save around £40 or more each year.

A household that does not own an electric vehicle would not receive the same vehicle-related benefit.

Likewise, an EV driver who relies entirely on public charging may see little direct advantage from the domestic electricity VAT change.

What does this mean for motorists?

For electric vehicle owners, the October change could provide a modest reduction in running costs.

The savings are unlikely to transform household finances on their own, but they could become more noticeable over several years.

The bigger issue is how the policy interacts with Britain’s broader effort to encourage electric vehicle adoption.

Lowering the cost of home charging may make electric vehicles more attractive to people who already have driveways and can install chargers.

However, people without private parking may not receive the same advantage.

That could become increasingly important as more drivers consider switching away from petrol and diesel vehicles.

A wider question for Burnham’s government

The policy also creates a political challenge for Andy Burnham’s government.

If ministers want to encourage electric vehicle ownership, they need to consider how charging costs are distributed across different types of households.

Reducing VAT on domestic electricity can help people who charge at home.

But if public charging remains subject to a substantially higher VAT rate, drivers without driveways may continue to face higher costs.

That could raise questions about whether the tax system is providing an equal incentive for all motorists.

The government could potentially address the difference through further investment in public charging infrastructure or changes to the taxation of public charging.

For now, however, the October VAT change remains the immediate development affecting domestic electricity users.

What households need to know before October

The most important message is that homeowners should not confuse the £40 figure with a new charge.

There is no general £40 driveway tax.

Instead, from October 1, domestic electricity VAT is scheduled to fall from 5 per cent to zero.

Electric vehicle owners who charge at home could therefore see lower charging costs.

Some typical drivers could save around £20 to £25 a year, while higher-mileage motorists could potentially save around £35 to £40 or more, depending on their usage.

The exact saving will vary from household to household.

The change also highlights a significant issue for motorists without driveways. Public charging remains subject to a higher VAT rate, meaning the financial advantage of home charging could become even more pronounced.

Ultimately, the October change is less dramatic than the “£40 driveway rule” headline suggests.

For homeowners, there is no new £40 bill to pay.

For electric vehicle owners with home chargers, there could instead be a modest annual saving.

The bigger question is whether future policies will ensure that drivers without driveways and private parking can enjoy comparable benefits as Britain continues its transition towards electric vehicles.