HMRC to appeal tribunal ruling that would cut public EV charging VAT to 5%

HMRC has confirmed that it will appeal against a landmark tax tribunal ruling which found that public electric vehicle charging should be subject to VAT at 5%, rather than the 20% rate that drivers have been paying for years, a decision that has sparked widespread anger across the charging industry.

The ruling, handed down last month by Judge Harriet Morgan at a London First-Tier Tribunal, followed a case brought by not-for-profit operator Charge My Street against HMRC. The tribunal concluded that applying the standard 20% rate to public charging amounted to a “strained construction” of the VAT Act, which treats electricity as “always for domestic use” provided a single customer does not consume more than 1,000kWh per month at one premises, enough energy to recharge a Tesla Model Y 16 times.

Had the ruling been allowed to stand, it would have ended one of the most contentious inequalities in the transition to electric motoring. Drivers who can plug in at home currently pay 5% VAT on their electricity, while the estimated 40% of UK households without off-street parking are charged 20% at public chargers, four times as much for identical electricity.

In a statement issued on Tuesday, an HMRC spokesperson said: “We’re appealing this case, as our position is that standard rate VAT applies to electricity supplied through public EV charging infrastructure.”

The Treasury’s reluctance to let the ruling stand is unsurprising given the sums at stake. Charger mapping firm Zapmap calculates that the VAT differential currently generates around £85 million a year for the Exchequer, a figure projected to climb to £315 million by 2030 and into the billions thereafter as EV adoption accelerates. With fiscal pressure mounting amid the Iran war and calls to scrap the planned fuel duty increase, ministers are clearly unwilling to surrender a growing revenue stream – particularly as they simultaneously prepare to introduce pay-per-mile taxation on electric cars.

The discrepancy was uncovered by accountancy firm Deloitte, which took on Charge My Street’s case pro bono. According to Deloitte tax partner Daniel Barlow, three days of tribunal argument turned on the precise meaning of words such as “a month” and “premises”.

Will Maden, a director at Charge My Street, warned that the appeal risks stalling Britain’s EV transition. “About 40% of the UK population, they don’t have drives. Transitioning to EVs is a huge problem. Adding 20% makes a huge difference,” he said. “My personal view is I think we should be making the transition to EVs as cheap as we can. This is an environmental issue.”

Although the First-Tier ruling technically applies only to Charge My Street, operators across the sector are understood to be poised to lodge their own claims for overpaid VAT stretching back years should the appeal fail.

Industry reaction has been scathing. John Lewis, chief executive of char.gy, described HMRC’s move as “a deeply disappointing decision, and one that sends entirely the wrong signal to the millions of people who rely on public charging”. He pledged that his company would immediately pass on any VAT cut to its customers, adding: “The government talks about accelerating EV adoption, yet is actively choosing to maintain a tax structure that makes public charging more expensive than it needs to be and undermines the transition. The question is: what is the government waiting for?”

Tanya Sinclair, chief executive of Electric Vehicles UK, accused ministers of defending inequality. “Drivers without off-street parking already pay more to charge simply because of where they live. HMRC appealing this ruling is the government choosing to defend that inequality,” she said. “If you’re serious about EV adoption, you don’t fight the ruling that would fix your most regressive charging cost. You let it stand. Their actions don’t match the narrative.”

Ginny Buckley, chief executive of Electrifying.com, pointed out that the disparity can make EVs more expensive to run than petrol cars for some drivers. “For a government that talks about standing up for ‘working people’, the decision to appeal this ruling flies in the face of that,” she said. “Those drivers can pay up to ten times more to charge an electric car than someone with a driveway – and in some cases, that makes EVs more expensive to run than petrol. If the government is serious about making EVs affordable, it cannot allow a two-tier system where access to cheaper, cleaner driving depends on what type of property you have.”

Warren Philips, campaign lead at FairCharge, which has long campaigned against the disparity, offered perhaps the sharpest assessment. “Charging people more because they depend on public infrastructure was wrong in principle, and the tribunal confirmed it,” he said. “People unable to charge at home pay four times the VAT rate of their neighbours for identical electricity, a failing that persisted long after the legal basis was challenged. By appealing, the government is telling 1.4 million current EV drivers, and more than 30 million who will have to switch, that it is willing to go to court to keep public charging costs high. It should accept the ruling and work with consumers and industry to put this right.”

With the Upper Tribunal appeal now set to proceed, the millions of British drivers who rely on public charging face a continued wait, and continued 20% VAT bills, before the question of whether they have been overcharged for years is finally resolved.