Plans to increase VAT on home charging could be afoot at HM Treasury in a move to tackle tax disparities and address falling fuel duty revenues.

Industry sources have told EV newsletter The Fast Charge that Treasury officials could be exploring applying a tax – or duty – on home charging in a move to ‘level the playing field’ between home and public charging and also help HMT address its rapidly dwindling funds from fuel duty.

Currently, VAT on domestic electricity is charged at 5% while drivers using public charge points have to pay 20% VAT – particularly hitting the c.40% of drivers who don’t have access to a driveway to install a home charger.

Long-running campaigns to lower public charging VAT to end the ‘driveway divide’ were rejected by the Conservatives in 2022 and now The Fast Charge says the Treasury could make use of ‘smart’ home chargers to turn the tables and hike up VAT on home charging. Such chargers would be used to differentiate between the electricity used at home for general domestic purposes, and electricity used to charge EVs.

In a statement, a Government spokesperson told The Fast Charge: “As part of our Clean Energy Plan for Change mission, we are committed to delivering the charging infrastructure the country needs for electric vehicles, and we will consider how the planning system can further support the rollout as needed.

“We recognise most drivers want the convenience of charging at home, which is why we have published guidance for local authorities on cross-pavement solutions and offer a grant to households with on-street parking.”

Fleet World also approached HM Treasury for comment.

In response to the story, Quentin Willson, founder of the FairCharge campaign group that’s been challenging the higher VAT on public charging, said: “Raising the VAT on home EV charging from 5% to 20% would deal a mortal blow to EV adoption and destroy the credibility of government environmental policy.

“Over 80% of EV drivers charge at home using renewable electricity. Such a move would be astonishingly short sighted… Fuel duty receipts are down because people are driving less and buying fewer cars. EVs still represent a tiny percentage of the vehicle population. This idea is so counter intuitive it feels like April Fool’s.”

The full story on the possible Treasury plans is in the latest newsletter from The Fast Charge here.