Court rules VAT on public EV charging should be slashed to 5%

The Government could be forced to cut VAT on public electric vehicle chargers after a court ruled that EV owners using the public charging network should only pay 5% VAT, bringing the tax on public charging into line with home charging.

The First-Tier Tribunal Tax Chamber’s landmark decision came after community charge point operator Charge My Street challenged the 20% VAT rate, arguing it puts those without access to home charging at a cost disadvantage.

Charge My Street’s legal representative Oliver Jarratt said: “Existing VAT law already says that the provision of less than 1,000 kWh per month of electricity to a person at any particular premises counts as “domestic” so we believed the 5% rate should already apply to public EV charging, provided it was under that limit.”

The case was heard last October, but the decision was only handed down this week. The court rejected arguments by HMRC that the reduced rate for electricity supplies applied only to domestic supplies of electricity to a person’s home or other “premises”, and occasional electricity supplied at public charge points was not an extension of this.

HMRC could seek permission to appeal, but Jarratt questioned whether this permission would be granted, based on how strongly the Tribunal rejected HMRC’s arguments on what the terms “premises” and “rate” meant.

An HMRC spokesperson said: “We are carefully considering the decision and our next steps.”

Charge My Street director Daniel Heery said: “This is a hugely important outcome for communities across the UK who rely on affordable, local EV charging. Our mission has always been to make neighbourhood charging accessible to everyone, and today’s ruling supports that mission.”

“Lower VAT on charging improves fairness and helps accelerate the shift to cleaner transport for all,” Heery added.

Matt Waller, general manager of The Charge Scheme, said: “For too long, drivers without a driveway have been penalised by a VAT system that charges them four times more than homeowners for exactly the same electricity. This ruling confirms what the industry has argued for years, and HMRC must now apply the five per cent rate across all public charging without delay rather than dragging this through an appeal.”

Chancellor Rachel Reeves did not mention the court ruling in the Spring Statement as it was only announced hours before the Commons announcement, but the Government is consulting with EV charging stakeholders in order to decide what to do.