HMRC will fight ruling to cut VAT on public EV chargers

A reduction in the level of VAT levied on public EV charging is being challenged by HM Revenue and Customs (HMRC), following a recent legal case.

Last year, a First-Tier Tribunal (FTT) heard an appeal from a not-for-profit charging company, Charge My Street, about the way in which VAT is applied to EV chargers. 

At present, using a public charger means electric car drivers must pay VAT at the commercial rate of 20 percent. Those using their own charger at home only see VAT levied at five percent. 

Charge My Street successfully argued to the FTT that this disparity should be removed, and that public electric vehicle charging should only attract VAT at the five percent domestic rate. 

Now, HMRC has announced it will seek to appeal the FTT’s decision, potentially denying cheaper charging to UK motorists.

Removing the EV charging disparity

The arguments in Charge My Street Limited v HMRC hinged upon highly technical legal interpretations of the UK’s VAT legislation. 

In particular, Charge My Street argued that exceptions in the Value Added Tax Act 1994 applied to public EV charging, as it provides premises where drivers can charge their cars. 

This interpretation of public EV charging points as ‘premises’ was accepted by the FTT, meaning the five percent VAT rate would be applicable instead of 20 percent. 

Under the wording of the current tax legislation, the five percent rate would apply to the first 1,000kWh of electricity supplied to a customer at a specific charging location each month. 

Exceeding the 1,000kWh limit in a single month would mean fully recharging a typical electric car more than 15 times.

Savings for drivers, lost revenue for HMRC

Various groups have long campaigned for the rate of VAT on public EV charging to be cut to five percent, arguing that it unfairly penalises those without access to off-street parking at home.

Previous analysis by Zapmap has found that reducing the level of VAT would typically save EV drivers without a home charger up to £145 per year. 

However, such a reduction could see HMRC losing revenue of £143 million in 2027, increasing to £315 million by 2030, according to Zapmap’s calculations.

The decision would also mean HMRC having to repay charging operators the overpaid level of VAT levied in previous years. 

However, as the Charge My Street matter was the lead case against HMRC, other UK charging point operators may now choose to bring their own challenges to the rules on VAT.

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