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.
Andy Burnham is introducing a new rule. (Image: Getty)
The initiative aims to help EV owners. (Image: Getty)
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“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 – Starts in October
A New October Change Could Make Home EV Charging Cheaper
A change taking effect in October 2026 is expected to reduce electricity costs for millions of households across Great Britain. The measure, announced by Prime Minister Andy Burnham’s government, removes VAT from qualifying domestic electricity supplies for a temporary six-month period. Although some headlines have described it as a “£1.98 driveway rule”, the change is not a new regulation governing driveways themselves. Instead, it concerns the cost of electricity used at home, including electricity used to charge electric vehicles. <escape>Source: UK Government</escape>
The policy comes at a time when household budgets remain under pressure from energy costs, transport expenses and other everyday bills. For drivers who own electric vehicles and have access to private parking, the reduction could make home charging slightly cheaper. However, the amount saved will depend on individual electricity tariffs, driving habits and the amount of power consumed.
What Is Changing from October 1?
Under the new measure, the VAT rate on qualifying domestic electricity supplies in England, Scotland and Wales falls from 5 per cent to zero between October 1, 2026, and March 31, 2027. The government says the temporary measure is intended to provide financial relief during the colder months, when household energy consumption often increases.
The change is part of a wider effort to reduce the cost of living. The government announced that the immediate tax reduction would be funded by cancelling the planned Digital ID programme, redirecting money that had previously been allocated to that initiative. <escape>Source: GOV.UK</escape>
For households, the practical effect is relatively straightforward: eligible domestic electricity supplies will no longer carry the usual 5 per cent VAT charge during the temporary period. Suppliers are expected to pass the reduction on to customers, including those on fixed tariffs.
The government estimated that the change could reduce the annual Ofgem price-cap bill by around £45. That figure is an estimate rather than a guaranteed saving for every household. Actual savings will depend on electricity consumption and the way the tax reduction is reflected in individual bills.
It is also important to understand what the measure does not do. It does not abolish all energy taxes, eliminate standing charges or guarantee that electricity prices will remain unchanged. Wholesale energy prices, network costs and other components of household bills can still fluctuate.
Why Electric Vehicle Owners Could Benefit
The policy has attracted attention among electric vehicle owners because home charging is an important part of the cost of running an electric car.
Many drivers charge their vehicles overnight, when electricity tariffs may be cheaper. Removing VAT from qualifying domestic electricity supplies means that the electricity used for home charging can cost less, assuming the supplier passes on the reduction and other tariff components remain unchanged.
The headline figure of £1.98 relates to an illustrative comparison of the cost of driving a particular electric vehicle for 100 miles. In the example reported by AOL, a Volkswagen ID.3 using a specified electricity tariff was estimated to cost about £1.97 per 100 miles before the VAT reduction and approximately £1.89 afterwards. Across 10,000 miles, that example would mean a reduction from roughly £198 to £189.
The figures are illustrative, not a universal price for driving an electric car. Different models have different energy consumption rates, and charging costs vary according to the tariff, battery efficiency, weather and driving conditions. Drivers using a different supplier or tariff may experience a different result.
Nevertheless, even a relatively small reduction can matter to motorists who charge regularly. For households that use their vehicles for commuting, school runs and shopping, lower running costs can contribute to savings over time.
The Difference Between Home Charging and Public Charging
One important distinction is the difference between charging an electric vehicle at home and using a public charging point.
The temporary zero-VAT measure applies to qualifying domestic electricity supplies in Great Britain. It does not automatically mean that every public electric vehicle charger will receive the same tax treatment.
Public charging prices are determined by operators and can include different electricity costs, network charges, service fees and other expenses. The VAT treatment of public charging is also a separate issue, with HM Revenue and Customs having published guidance on the treatment of electricity supplied through public charge points.
Consequently, drivers who rely on public chargers should not assume that their charging prices will fall by the same amount as those for eligible household electricity. The effect of the domestic tax change is likely to be most direct for people who can charge their vehicles using electricity supplied to their homes.
This creates an important practical distinction between motorists with driveways or garages and those who depend on public charging infrastructure.
Could This Widen the Driveway Divide?
The phrase “driveway rule” draws attention to a genuine issue facing electric vehicle owners: not everyone has access to off-street parking.
People with a driveway can often install a home charger and take advantage of domestic electricity tariffs. They may also be able to charge overnight without travelling to a separate charging station.
By contrast, residents in flats, terraced houses and properties without private parking may have to use public charging points. Depending on local infrastructure and the prices charged by operators, these motorists may face higher costs or greater inconvenience.
The VAT reduction does not directly solve that problem. Instead, it makes eligible domestic electricity cheaper for a limited period, potentially increasing the financial advantage enjoyed by households that already have convenient access to home charging.
The government has previously published guidance on cross-pavement charging solutions, which can allow residents without driveways to charge electric vehicles safely where local authorities approve suitable installations. These arrangements can involve special pavement channels or other approved systems to prevent trailing cables from becoming hazards for pedestrians. Permission and installation requirements vary by location. <escape>Source: Department for Transport</escape>
Improving access to such solutions could help more households benefit from home electricity tariffs. However, the October VAT measure itself does not introduce a nationwide right to run charging cables across pavements or guarantee that councils will approve every installation.
What About Drivers Who Do Not Own Electric Cars?
Although electric vehicle owners have attracted particular attention, the measure is designed to affect qualifying domestic electricity supplies more broadly.
Households that use electricity for lighting, appliances, cooking and other everyday needs may also benefit. The scale of the saving will depend on how much eligible electricity they consume and how the reduction is passed through by their supplier.
This matters because the policy is primarily an energy-bill measure rather than a transport subsidy. Electric vehicle charging is one potential use of domestic electricity, but it is not the only one.
Households should therefore avoid assuming that the £1.98 figure represents the amount they will save each month. It is an example based on a particular vehicle and tariff, not a fixed payment or rebate available to every motorist.
Customers who want to understand their likely savings should compare their electricity statements and tariff information before and after the change. Those on fixed tariffs should also check how their supplier applies the temporary reduction.
How Will the Policy Be Funded?
The government has said that the temporary tax reduction will be funded during the 2026–27 financial year through the cancellation of the Digital ID programme.
That decision links the cost-of-living measure to a broader debate about public spending priorities. Supporters of the approach may argue that reducing essential household expenses provides more immediate assistance than pursuing a costly administrative programme. Critics may question whether a temporary reduction is sufficient to address longer-term pressures on household budgets.
The government has estimated that the measure will cost approximately £850 million in 2026–27, although updated figures are expected as part of the Budget process. It has also stated that longer-term measures will require further decisions about funding and public finances.
These details are important because a temporary tax reduction does not resolve every cause of high energy bills. The long-term cost of electricity will continue to depend on wholesale prices, infrastructure investment, the energy mix and wider economic conditions.
What Should Motorists Do Now?
Drivers do not need to install a new driveway or apply for a special “£1.98 rule” permit to benefit from the domestic electricity VAT change.
Instead, electric vehicle owners should check whether their household electricity supply qualifies, review their charging tariff and monitor how their supplier reflects the reduction on their bills. Those who charge mainly at public stations should check the prices offered by individual operators rather than assuming the domestic VAT change applies to them.
Anyone considering a home charger should also account for the upfront installation cost, the suitability of their electrical system and the price of the tariff they intend to use. A lower electricity tax can improve the economics of home charging, but it does not automatically make every installation financially worthwhile.
For households without private parking, contacting the local authority about approved cross-pavement charging options may be a useful first step. Residents should not leave an ordinary charging cable trailing across a public pavement without an appropriate, safe and permitted arrangement.
A Small Saving, but Not a New Driveway Law
Andy Burnham’s October measure could provide some relief for households facing high electricity costs and offer an additional saving to drivers who charge electric vehicles at home. The reduction is temporary, applies to qualifying domestic electricity supplies in Great Britain and is expected to remain in place until March 31, 2027.
The much-discussed £1.98 figure is best understood as an illustration of how the tax change may affect the cost of driving a particular electric vehicle, rather than a new legal rule for driveways.
For motorists, the main questions are practical: how much electricity they use, which tariff they have, whether they can charge at home and how their supplier passes on the reduction. Those factors will determine the real benefit.
The policy may lower costs for some households, but it does not remove the wider challenges of energy affordability or unequal access to convenient electric vehicle charging. Its overall impact will become clearer as customers receive bills under the new arrangements and the temporary measure progresses through the winter.