The Government has said it has no current plans to review the rate of VAT applied to EV charging, despite growing calls for its “illogical” existing policy to change.

While electricity for domestic use, including private charge points, attracts a reduced 5% VAT rate, electricity supplied at EV charging points in public places is subject to the standard 20% rate

At the moment, VAT on domestic electricity is charged at 5% to keep costs down for families. But those using public charge points have to pay 20% VAT – in particular, this hits the c.40% of drivers who don’t have access to a driveway to install a home charger.

It’s a subject that has come under focus in recent weeks by both the RAC and the FairCharge campaign, spearheaded by automotive journalist, Quentin Willson, which said that charging needs to be both fit for purpose and fair.

But responding to a question from Conservative MP Stephen Metcalfe this week, Exchequer Secretary Helen Whately has said that the Treasury has no plans to change VAT on public charging.

She commented: “The Government has not specifically introduced a reduced rate for charging EVs at home. However, the practical challenges of differentiating between the electricity used at home for general domestic purposes, and electricity used to charge EVs currently, mean that the reduced rate is effectively being applied to EV home-charging.

“Applying the reduced rate of VAT to electricity supplied at EV charging points in public places would come at a cost. VAT makes a significant contribution towards the public finances, raising around £130bn in 2019/20, and helps fund the Government’s priorities including the NHS, schools and defence. Any loss in tax revenue would have to be balanced by a reduction in public spending, increased borrowing or increased taxation elsewhere.”

Quentin Willson, founder of the RAC-backed FairCharge campaign, has since disputed this and said that with the huge windfall in Treasury receipts because of higher oil and fuel prices, there is plenty of fiscal room to bring VAT on public charging down from 20% to 5%.

“For those without driveways or parking spaces, the 20% VAT levy will mean millions of voters will be excluded from driving an EV,” he added. “This is a massive Treasury policy blunder with serious societal implications. FairCharge has worked out that at the current rate of EV adoption, lowering the VAT on public charging would cost just £14m. That’s a tiny raindrop echoing in an ocean.”

The RAC has also said it’s disappointed that the Government appears to be closing the door on fairer taxation for electric vehicles.

Head of roads policy Nicholas Lyes continued: “The real issue is that those EV owners without driveways will be hugely dependent on public charge points, so it cannot be fair they are effectively being hit with a much higher rate of taxation than those that can charge at home. If the Government wants to make electric vehicle ownership truly universal, it needs to rectify this anomaly quickly.”

And Ian Johnston, CEO of Osprey Charging, said: “We support the idea of reducing the VAT rate for public charging from 20%, to match the home tariff VAT of 5% and we’re disappointed to not see this change take effect. At a time when energy prices are increasing, this saving could have made a big difference for EV drivers – particularly for those who don’t have driveways and so are heavily relying on the public network. If the Government wants to encourage EV ownership for everyone, it needs to ensure it minimises inequalities in charging costs like this as much as possible.”