Zapmap’s analysis has found that VAT is charged at the lower level of 5 percent for domestic energy whilst at a higher 20 percent rate for energy on public charging, which means that EV drivers who are not able to charge their vehicles at home face a double penalty. They lack the convenience of being able to charge at home but also have to pay more for charging. The increased payments are due to the higher cost of public charging and the higher rate of VAT, leading to some calling this a “pavement tax”.
The issue is widely acknowledged in the EV sector, leading to groups such as the FairCharge campaign attempting to address it. FairCharge recently wrote to Treasury Chief Secretary Darren Jones arguing that this disparity is holding back the EV transition, and these calls have been supported by automotive giants, including Stellantis and Polestar.
The Zapmap analysis quantifies the impact of the differential VAT rates on EV drivers, which groups would benefit most from an equalisation in VAT and how much this would cost the government. The findings were generated using EV and charging forecasts, EV model efficiency combined with EV driver and charging patterns with data from end of 2024 and focuses solely on battery electric vehicles (BEVs).
VAT on charging is levied against all EV drivers – 5 percent for home charging and 20 percent for public charging. That means in 2025, a a BEV driver with a home charger, based on average mileage and BEV efficiency, will pay £48 in VAT whilst a BEV driver with no home charger will pay £194 in VAT. A BEV driver with a home charger will charge their vehicle both at home and with public charging, while a driver lacking a home charger will have to rely solely on the public charging network.
Around 80 percent of the 1.4 million UK BEV drivers in the UK have a charge point at home. This accounts for, on average, 85 percent of their charging needs, according to Zapmap’s 2024 EV Charging Survey. Some drivers lacking a chargepoint at home can access workplace charging or shared community charging, but the vast majority of them depend on the public charging network.
Equalising VAT across domestic and public charging at 5 percent would save an average of £29 per year for a BEV driver with home charging and an average of £145 per year for those drivers without home charging. This would reduce the amount of tax from VAT across the BEV sector by an estimated £85 million in 2025, rising to £143 million in 2027 and £315 million in 2030. In the October 2024 budget, the government committed £2 billion to a freeze on fuel duty for polluting petrol and diesel cars.
On aggregate, 56 percent of the total reduction in VAT would benefit BEV drivers with no home chargers, given that they rely on the public charging network for their charging needs.
“Reducing VAT on public charging is a critical step but only if the cost savings are passed to the consumer - and good to see Instavolt make that commitment here” said Vicky Edmonds, CEO of EVA England. “And as we’ve said before we need to do more than that to get near price parity between a 7p/KW charge at home and up to 78p on the public network. Making it easier to access cross pavement technologies, a bigger push on workplace charging - and getting a much better understanding of what is driving those high public charging costs are also vital.”
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