Treasury rejected ministers’ plan to cut VAT on public EV charging to 5%

The UK Treasury has rejected a proposal to cut VAT on public electric vehicle charging from 20% to 5%, despite support from the Department for Transport and a recent tax tribunal ruling that the lower rate should apply [1]. Officials in the Department for Transport had encouraged charge point operators to write to the Treasury, with the companies pledging to pass any tax cut directly to consumers [1]. The government is under pressure to address the disparity, as those who can charge at home pay a domestic electricity VAT rate of 5%, while public charging attracts the standard 20% rate—a difference critics label a 'pavement tax' [1]. The Labour government is reviewing public charging costs, with the VAT issue a key part of a report due in the autumn [1]. The UK's transition to electric vehicles has been actively supported by government incentives, with about 745,000 light-duty plug-in electric vehicles registered by the end of 2021 [6]. However, the adoption rate is sensitive to policy and infrastructure costs [8]. The Treasury's resistance is understood to stem from concerns over future lost VAT revenues, especially as fuel duty from petrol and diesel cars declines [1]. This stance persists despite a London tax tribunal ruling in March that the 5% rate should have been applied all along due to a misapplication of the law; HMRC is appealing the decision [1]. Dan Caesar, founder of Electric Vehicles UK, argued, "VAT on public charging should be canned, making EVs cheaper for all" [1]. The government spokesperson highlighted existing support, including savings of up to £3,750 off a new car for over 95,000 people and over £7.5bn of investment into the UK EV sector [1]. Globally, electric vehicle adoption varies widely based on government policies and charging infrastructure, with plug-in cars representing about 1% of the world's passenger vehicles by the end of 2020 [8]. The outcome of the UK's review and the tribunal appeal will signal the government's commitment to resolving this fiscal barrier to cleaner transport.