Andy Burnham has introduced a new regulation affecting motorists with driveways. The Prime Minister slashed VAT rates on domestic electricity charging from October 1, dropping rates from 5% to 0%. The initiative aims to help households combat rising electricity bills during the cost-of-living crisis, while also supporting electric car owners who charge their vehicles at home. Drivers will witness the average cost of charging their EV on their driveway decrease under the new regulation.

Taking a Volkswagen ID. 3 150kW Match Pro S 79kWh 5dr Auto as an example, LeaseElectric said motorists charging with the EDF Energy Go Electric with Pod Point tariff will now pay just 1.89p per mile.

This represents a reduction from the previous rate of 1.97p. Over 10,000 miles, the saving means road users will pay approximately £189 to use the road, rather than £198.

Nevertheless, costs will differ depending on the particular tariff that road users have selected. Those charging the Volkswagen EV using the Good Energy EV Tariff could pay as little as 1.47p per mile, down from 1.54p per mile before the reduction.

LeaseElectric said: “For millions of households, this means lower electricity bills heading into winter. For electric vehicle drivers, however, it means something even more significant: charging an electric vehicle at home is about to become even cheaper.

“Because most EV owners charge their vehicles at home, removing VAT from domestic electricity means every home charge will cost less from 1 October 2026.”

Experts at Andersen EV have previously warned that some high-mileage motorists could save as much as £40 per annum due to the new VAT updates.

The development will prove unwelcome to those without a driveway or off-street parking and who rely on public charging points for their vehicles.

Electricity charges will remain unchanged at public plugs, with road users continuing to pay 20% VAT when topping up. The new regulation means the “driveway divide” between home rates will significantly widen.

Andy Burnham Introduces New £1.98 Driveway Rule – What UK Drivers Need to Know This October

A new set of changes affecting electric vehicle owners has come into effect in October, sparking debate about the cost of charging cars at home compared with using public charging points. Dubbed the “£1.98 driveway rule” in headlines, the changes concern electricity VAT, the cost of running electric vehicles and new arrangements intended to make charging easier for people without private driveways.

The headline figure refers to potential savings for motorists who charge their vehicles at home. However, the changes are more complicated than the name suggests, and not every driver will benefit equally.

What is behind the £1.98 figure?

The key change reported this month is a reduction in VAT on domestic electricity from 5% to 0%, effective from October 1, 2026. For drivers who charge an electric vehicle at home, the lower rate can reduce the cost of charging, although the exact saving depends on their electricity tariff, vehicle efficiency and annual mileage.

The £1.98 figure relates to an example of the cost of driving an electric car before the change. One comparison involving a Volkswagen ID.3 estimated that charging costs could fall from around 1.97 pence per mile to 1.89 pence per mile under a particular electricity tariff. The figures are illustrative rather than a universal price that all motorists will pay. <Cite refs={[“turn662024search1″,”turn662024search0”]}/>

For a driver covering 10,000 miles annually, even a small reduction per mile can add up over time. But actual savings will vary significantly. A household using a standard electricity tariff may see a different result from one using a specialist overnight tariff designed for electric vehicles.

Drivers should therefore check their own electricity bills before assuming they will save a particular amount.

Why having a driveway matters

The central controversy is the difference between home charging and public charging.

Drivers with off-street parking can often install a home charger and schedule charging during cheaper periods. Those with suitable electricity tariffs may pay substantially less per unit of electricity than motorists relying on rapid public charging stations.

Public charging has continued to attract 20% VAT, while domestic electricity benefits from the lower rate described in reports. That difference means drivers who cannot charge at home may face higher costs even when they own the same type of electric vehicle. <Cite refs={[“turn662024search8″,”turn662024search12”]}/>

For people living in flats, terraced houses or streets without private parking, the distinction can be particularly important. They may depend on chargers installed on residential streets, at supermarkets, at retail parks or in public car parks.

This creates what campaigners and industry representatives have called a “driveway divide”: the possibility that households with private parking can access cheaper charging more easily than those without it.

The issue is not simply about convenience. Charging costs can influence the overall affordability of owning an electric car, especially for drivers who cover long distances for work or have limited household budgets.

New rules for charging across pavements

Another change introduced in October concerns cross-pavement charging solutions. These systems can allow residents without driveways to connect a vehicle parked on the street to electricity supplied from their home, using an appropriate cable-management arrangement.

Reports say that from October 21, certain installations no longer require the same formal planning-permission process as before. However, this does not mean motorists can simply run an ordinary cable across a pavement without approval or regard for pedestrians. Local highway authority approval and safety requirements remain important, and exemptions may apply in conservation areas. <Cite refs={[“turn662024search2″,”turn662024search9”]}/>

The purpose is to make it easier for eligible residents to access home charging without creating hazards for people using the pavement, including wheelchair users, parents with pushchairs and people with limited vision.

The practical impact will depend on local council procedures, the suitability of the street and the type of charging installation proposed. Some residents may find the process straightforward, while others may still face restrictions.

Industry concerns over unequal charging costs

Electric vehicle specialists have welcomed efforts to make home charging more affordable, but some have argued that the tax difference between domestic and public charging should also be addressed.

Public charging operators face costs beyond VAT, including electricity supply, equipment installation, maintenance, network connections and the operation of charging sites. These costs help explain why public charging prices cannot be compared directly with the price of electricity used at home.

Nevertheless, the gap remains a concern for motorists who have no practical way to install a charger at their property.

Industry representatives have suggested several possible approaches, including reviewing VAT on public charging, reducing certain operating costs and examining policy charges included in electricity prices. Such proposals would require further decisions and should not be confused with changes already in force. <Cite refs={[“turn662024search12″,”turn662024search8”]}/>

What does this mean for ordinary motorists?

For drivers who already charge at home, the lower domestic VAT rate may reduce their electricity costs. Those who use an overnight tariff could potentially benefit further, depending on the terms offered by their supplier.

However, motorists should not assume that the reduction automatically means their entire electricity bill will fall by a fixed percentage. Standing charges, wholesale electricity prices, tariff structures and household consumption all affect the final amount paid.

Drivers who depend entirely on public charging may see little direct benefit from the domestic VAT change. They should compare charging networks and tariffs carefully, while considering whether workplace or residential charging options are available.

People considering an electric vehicle should also calculate the total cost of ownership, including purchase price, insurance, maintenance, depreciation and charging. A low home-charging rate can make a meaningful difference, but it is only one part of the calculation.

Will the changes solve the driveway divide?

The October measures address two separate problems: the cost of domestic electricity and the practical barriers facing people who want to charge vehicles near their homes. Lower domestic VAT may help households that already have suitable parking, while the changes to cross-pavement arrangements could create new options for some residents without driveways.

Neither measure guarantees that every driver will have access to affordable charging. Local approval requirements, the design of pavements, the availability of suitable parking spaces and the price of public charging will continue to shape the experience of electric vehicle owners.

The political debate is therefore likely to continue. Supporters of cheaper home charging can point to potential savings for households, while critics argue that public charging users should not be left facing a substantially different tax treatment.

For now, motorists should focus on the details rather than the headline. The so-called “£1.98 driveway rule” is not a single nationwide fee for owning a driveway. It is a label used in coverage of changes to electricity taxation and charging arrangements that could affect electric vehicle costs in different ways.

The real outcome will depend on where drivers park, how they charge their cars and the tariffs available to them. As more households consider switching to electric vehicles, ensuring that convenient and reasonably priced charging is accessible beyond homes with private driveways will remain a central challenge.