A tribunal has ruled that 5% VAT applies to public electric vehicle (EV) charging, in an appeal led by Deloitte for Charge My Street.
Currently, all home EV charging has 5% VAT levied on it, while 20% VAT is charged on all public EV charging.
Deloitte cited that up to 1000kWh of electricity supplied to a single person at a particular premises always counts as domestic.
Writing on Linkedin, Oliver Jarratt, VAT specialist, director and solicitor at Deloitte Legal, said: “The First-tier Tribunal has just given its judgment, ruling that the 5% rate indeed applies to public EV charging in those circumstances.
“The judgment is clear, unequivocal and a thumping victory for Charge My Street.
“While HMRC could seek permission to appeal, query if permission would be granted given how strongly the Tribunal rejected HMRC’s arguments on what the terms ‘premises’ and ‘rate’ meant.”
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Lorna McAtear, deputy chair at the 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 Charge My Street decision are not yet clear, it could prove a staging post towards that objective.
“As it stands, however, this judgement only applies in very limited circumstances and could yet be appealed.
“We are watching the situation with interest.”
Matt Waller, general manager at 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 5 percent rate across all public charging without delay rather than dragging this through an appeal.
“However, VAT is only part of the affordability problem. Public charging can still cost up to ten times more than plugging in at home on an overnight tariff, which means millions of people who rent or live in flats fundamentally face an unfair barrier to switching to EVs.
“New salary sacrifice schemes are already helping people in these situations save up to 50 percent on their home charging costs.
“So combining fairer VAT with salary sacrifice benefits would make a real difference for the families who need it most.”
Russell Olive, UK director at vaylens, said: “Charging EV drivers more tax simply because they can’t charge at home has always been a structural flaw in the system.
“If this tribunal ruling ultimately leads to change, it would remove a clear imbalance for fleets and drivers without access to home charging.
“However, even if VAT is reduced, it won’t by itself transform fleet electrification. Businesses still have to make the operational model work in practice.
“Public charging is rarely the backbone of a fleet strategy. What we’re seeing instead is a layered approach: depot charging first, shared or semi-public infrastructure second, and public charging as a back-up.
“Better use of existing depot capacity, combined with clearer insight into how vehicles are actually used, will have just as much impact as any tax adjustment.”
