UK Government Eliminates VAT on Domestic Electricity Rates
Prime Minister Andy Burnham reduced VAT on domestic electricity from 5% to 0%, lowering home charging costs for electric vehicle owners while public charging remains at 20%.
The Government of the United Kingdom reduced VAT on domestic electricity charges from 5% to 0% effective October 1. Prime Minister Andy Burnham implemented the measure to lower household energy bills and increase affordability for electric vehicle owners with private off-street parking.
Analysis indicates that drivers using smart tariffs will see costs drop to approximately 7p per kWh, or 2p per mile, while those on standard domestic tariffs will pay 24p per kWh. However, the policy maintains a 20% VAT rate on public charging, creating a cost disparity where public infrastructure can cost up to 50p per kWh.
Industry experts warn this creates a driveway divide that penalizes renters and flat-dwellers. Matt Galvin of Polestar UK described the move as an important first step toward lowering the cost of living but urged the administration to abolish VAT on public charging and extend chargepoint grants for households without off-street parking beyond March 2027. Galvin argued that reducing electricity costs must become a defining economic and energy priority for the government.
