HM Revenue and Customs has confirmed it will appeal against a First Tier Tribunal ruling that would reduce VAT on public electric vehicle charging from 20% to 5%. This decision has drawn sharp criticism from charging point operators, activists and SME-led infrastructure companies across the country.
The ruling last month followed a case brought by Charge My Street, a non-profit charging operator, which successfully argued that electricity supplied via public chargers should fall under the reduced rate of 5% that applies to domestic electricity consumption. Judge Harriet Morgan found that the application of the standard rate of 20% was a “strained construction” of the VAT law, which treats electricity as intended for domestic use provided that a single user does not use more than 1,000 kilowatt hours at one location in a given month, which in practice is enough to charge a Tesla Model Y sixteen times.
That finding, uncovered after accounting firm Deloitte recognized the discrepancy and worked on a pro bono basis with Charge My Street, offered the clearest hope in years that the long-standing gap between private and public charging costs could finally close. For three days the court revolved around the interpretation of a handful of words, notably “a month” and “premises”, before the judge came out strongly against HMRC’s position.
However, the Treasury has no intention of backing down. In a statement on Tuesday, an HMRC spokesman said: “We are appealing this case as we believe that the normal rate of VAT applies to electricity supplied via public electric vehicle charging infrastructure.”
There is a lot at stake for the drivers. If you’re lucky enough to have a driveway, you’ll pay 5% VAT when charging at home; An estimated 40% of UK households without off-street parking face 20% public chargers, which is four times the price of identical electricity. Industry figures suggest that operating an electric vehicle using public charging stations alone can cost up to ten times more per mile than charging at home, undermining the very economic arguments the government is relying on to accelerate the transition away from petrol and diesel.
According to calculations by charger mapping company Zapmap, the VAT difference currently brings in around £85 million a year to the Treasury. This figure is expected to rise to £315 million by 2030 and billions thereafter as the national electric vehicle fleet grows. Given the tight fiscal situation caused by the Iran conflict, increasing pressure to scrap a planned increase in fuel duty and the government’s commitment to introduce a mileage tax on electric cars, ministers appear reluctant to forego a growing source of revenue to replace the £24.5 billion currently generated annually by fuel duty.
The objection has sparked an unusually unified response from an industry more focused on commercial rivalry than common cause.
Will Maden, director of Charge My Street, was blunt: “Around 40% of the UK population doesn’t have a car. Switching to electric vehicles is a huge problem. Adding 20% makes a big difference. My personal view is that we should make the transition to electric vehicles as cheap as possible. This is an environmental problem.”
John Lewis, managing director of charging station operator char.gy, described the appeal as “a deeply disappointing decision that sends completely the wrong message to the millions of people who rely on public charging.” Lewis confirmed his company would pass on any VAT cuts directly to customers, adding: “The government is talking about accelerating the uptake of electric vehicles but is actively choosing to maintain a tax structure that makes public charging more expensive than it needs to be and undermines the transition.”
Tanya Sinclair, chief executive of Electric Vehicles UK, accused ministers of defending inequality by proxy: “Drivers who don’t park off-street are already paying more for charging simply because of where they live. HMRC’s appeal against this decision is a decision by the government to defend this inequality. If you are serious about adopting electric vehicles, don’t fight the decision that would fix your most declining charging costs.”
Ginny Buckley, CEO of Electrifying.com, questioned the political optics. “For a government that talks about standing up for ‘working people’, the decision to appeal is at odds with that,” she said. “This hits those without access hardest, making it more expensive for them to switch and in some cases this makes electric vehicles more expensive to run than petrol ones.”
Warren Philips, campaign director at FairCharge, which led the lobbying effort, called the appeal untenable: “People who can’t charge at home are paying four times the VAT rate of their neighbors for the same electricity. With the appeal, the government tells 1.4 million current electric vehicle drivers and more than 30 million who need to switch that it is prepared to go to court to keep public charging costs high.”
The arbitration tribunal’s decision initially only binds Charge My Street. However, if HMRC’s appeal to the High Court fails, the floodgates will open: it is understood operators across the industry have been preparing claims for overpayment of VAT for years, a liability that could run into hundreds of millions of pounds.
For the UK’s mid-sized charging point operators, who are often small, founder-led businesses already struggling with grid connection delays, planning bottlenecks and capital costs, the appeal represents more than just a financial upset. They say it is a test of whether Whitehall is serious about the commercial underpinnings of the net zero transition or is just content to talk about it.
