Public charging VAT should be 5%, rules tax tribunal

The cost of public charging in the UK could fall after a landmark tax hearing ruled that it should be subject to the same 5% VAT as domestic charging.

On-street charging specialist Charge my Street argued against the current 20% VAT on public charging based on advice from global accountancy specialist Deloitte.

Deloitte’s team highlighted an existing VAT law that states that provision of less than 1,000kWh of energy to a person at any premises counts as a “domestic” supply and should, therefore, be subject to the lower 5% domestic VAT rate.

In what Deloitte’s VAT specialist called a “thumping victory”, a first-tier tribunal backed Charge my Street’s case, agreeing that in such circumstances a 5% VAT should apply.

Director and VAT specialist for Deloitte, Oliver Jarratt, said that even if a driver always charged at the same public charger, it would be “nigh-on impossible” to exceed 1,000kWh per month.

The 1,000kWh limit is equivalent to fully charging the new 108kWh BMW iX3 from 0-100% more than nine times. At its official range of 500 miles, that equates to more than 4,000 miles of driving per month.

Daniel Heery, director at Charge My Street, said: “This is a hugely important outcome – not just for Charge My Street, but for communities across the UK who rely on affordable, local EV charging.

“Our mission has always been to make neighbourhood charging accessible to everyone, and today’s ruling supports that mission.

“Lower VAT on charging improves fairness and helps accelerate the shift to cleaner transport for all.”

The tribunal ruling contradicted HMRC’s previous briefing which argued that a reduced rate did not apply to public charging locations because they were not one fixed location delivering to one person where the rate of supply could be calculated.

It is not clear what short-term impact the tribunal ruling will have on charging costs. HMRC has 56 days to appeal against the ruling and has said it is “carefully considering” the ruling and its next steps.

Writing on LinkedIn, Jarratt said: “The judgment is clear, unequivocal and a thumping victory for Charge My Street. This is fabulous news not only for Charge my Street, but also for the wider EV charging industry.”

The charging industry has long argued that the higher rate of VAT on public charging is unfair and a barrier to wider EV adoption. Previously, motoring organisations and members of the House of Lords have backed calls to align public and private tax rates on charging. In January it was reported that the Treasury was considering giving in to these calls amid fears over the impact of the 3p-per-mile tax on EVs coming in 2028.

Russell Olive, UK director at charging management specialist Vaylens, commented: “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.”