A UK tribunal has ruled that the VAT rate for community public charging should be cut from 20% to 5%, aligning with the rate for domestic charging.

The landmark judgment is expected to have wide-ranging implications for EV drivers, fleets and charging firms, supporting access, affordability and Net Zero goals.

Charge My Street (CMS), represented by Deloitte and Sarabjit Singh KC, challenged an HMRC decision requiring 20% VAT to be accounted for on supplies of public EV charging.

The case centred on whether the CMS operations – which provide accessible, community-based EV charging – should fall under the ‘de minimis’ provisions that allow a 5% VAT rate on small-scale supplies of electricity supplied for domestic consumption.

Deloitte’s case drew on existing VAT law that already says that the provision of less than 1,000kWh per month of electricity to a person at any particular premises counts as “domestic”.

Deloitte said the 5% rate already should apply to public EV charging, provided it was under that limit – and the global legal giant said that even if an EV driver always charged at the same public charge point, it would be still be “nigh-on impossible” to exceed 1,000kWh per month.

The Tribunal found that Charge My Street’s model of providing accessible, community-based EV charging met the criteria for the reduced VAT rate previously reserved for domestic electricity supplies.

The ruling overturns HMRC’s initial decision requiring charge point operators to charge the full 20% VAT – which has been widely criticised as a barrier to equitable EV adoption.

The Tribunal agreed that Charge My Street’s approach aligns with the underlying purpose of the reduced rate: enabling households and communities to access affordable energy and supporting the UK’s transition to electric mobility.

According to Deloitte, HMRC could seek permission to appeal, but there are queries over whether permission would be granted given how strongly the Tribunal rejected HMRC’s arguments on what the terms “premises” and “rate” meant.

Daniel Heery, director at Charge My Street, said it was a “hugely important outcome” for both the company itself and 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. We rely on investment from ordinary EV drivers to extend our charge point network, and this result helps the commercial case for our current share offer.”

Daniel Barlow, tax partner at Deloitte, elaborated: “The First-tier Tribunal found that, under existing UK law, drivers should be charged the 5% reduced rate of VAT when charging their electric vehicles at any public charging facility. Specifically, the Tribunal interpreted the de-minimis provision in Note 5(g), Group 1, Schedule 7A, VAT Act 1994 as applying the 5% reduced rate of VAT to supplies of electricity at public EV charging locations where the amount of electricity supplied is below 1,000 kilowatt hours per month per customer at each location.”

Charge My Street said the judgment is expected to influence VAT treatment for other operators providing public EV charging, and the BVRLA said it could be “massive news”.

However, there are queries over whether the specific circumstances will be applied to all charge point operators. A briefing note issued by HMRC in 2021 around the VAT liability for EV charging through charging points in public places said the ‘de minimis’ provision does not apply to supplies of electric vehicle charging at charging points in public places. HMRC said this was because “these supplies are made at various places such as car parks, petrol stations and on-street parking, not to a personʼs house or building. In addition, these supplies are not usually an ongoing supply to one person where the rate of supply can be calculated”.

The ruling follows years of campaigning for the 20% VAT rate on public charging to drop to 5% in order to tackle an “illogical” policy that’s stopping some drivers from going electric.

Lorna McAtear, deputy chair at the Association of Fleet Professionals (AFP), said: “It’s been an AFP objective featured for some time in our Tax Manifesto to get VAT reduced on public charging and, while the implications of the CMS decision are not yet clear, it could prove a staging post towards that objective.

“As it stands, however, this judgment only applies in very limited circumstances and could yet be appealed. We are watching the situation with interest.”