HMRC appeals tribunal ruling that would slash VAT on public EV chargers to 5%

HM Revenue and Customs has confirmed it will appeal against a First-Tier Tribunal ruling that would cut VAT on public electric vehicle charging from 20% to 5%, in a decision that has drawn stinging criticism from charge point operators, campaigners and SME-led infrastructure businesses across the country.

The ruling, handed down last month, followed a case brought by Charge My Street, a not-for-profit charging operator, which argued successfully that electricity supplied through public chargers should fall within the reduced 5% rate applied to domestic electricity use. Judge Harriet Morgan found that applying the standard 20% rate was a “strained construction” of the VAT Act, which treats electricity as being for domestic use provided a single user does not consume more than 1,000 kilowatt hours at one premises in a given month, enough, in practical terms, to recharge a Tesla Model Y sixteen times over.

That finding, uncovered after accountancy firm Deloitte spotted the discrepancy and worked pro bono alongside Charge My Street, offered the clearest hope in years that the long-standing gulf between home and public charging costs might finally close. Three days of tribunal argument turned on the interpretation of a handful of words, notably “a month” and “premises”, before the judge came down firmly against HMRC’s position.

The Treasury, however, has no intention of conceding. In a statement 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.”

For drivers, the stakes are considerable. Those fortunate enough to have a driveway pay 5% VAT when charging at home; the estimated 40% of UK households without off-street parking are stung with 20% at public chargers, four times the rate for what is, electrically speaking, identical electricity. In some cases, industry figures note, running an EV on public charging alone can cost up to ten times more per mile than charging at home, eroding the very economic case government policy relies upon to accelerate the switch from petrol and diesel.

According to calculations by charger-mapping company Zapmap, the VAT differential currently nets the Treasury roughly £85m a year. That figure is projected to climb to £315m by 2030 and into the billions thereafter as the national EV fleet scales. Against a fiscal backdrop strained by the Iran conflict, mounting pressure to scrap a planned fuel duty increase, and the government’s own commitment to introduce pay-per-mile taxation on electric cars, ministers are evidently reluctant to surrender a growing revenue stream to replace the £24.5bn currently generated annually by fuel duty.

The appeal has triggered an unusually unified response from an industry more often given to commercial rivalry than common cause.

Will Maden, director at Charge My Street, was blunt: “About 40% of the UK population, they don’t have drives. Transitioning to EVs is a huge problem. Adding 20% makes a huge difference. My personal view is we should be making the transition to EVs as cheap as we can. This is an environmental issue.”

John Lewis, chief executive of charge point operator char.gy, described the appeal as “a deeply disappointing decision, and one that sends entirely the wrong signal to the millions of people who rely on public charging.” Lewis confirmed his firm would pass any eventual VAT cut straight through to customers, adding that “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.”

Tanya Sinclair, chief executive of Electric Vehicles UK, accused ministers of defending inequality by proxy: “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. If you’re serious about EV adoption, you don’t fight the ruling that would fix your most regressive charging cost.”

Ginny Buckley, chief executive of Electrifying.com, questioned the political optics. “For a government that talks about standing up for ‘working people’, the decision to appeal flies in the face of that,” she said. “This hits those without driveways the hardest, making it more expensive for them to switch, and in some cases, that makes EVs more expensive to run than petrol.”

Warren Philips, campaign lead at FairCharge, which has spearheaded the lobbying effort, called the appeal indefensible: “People unable to charge at home pay four times the VAT rate of their neighbours for identical electricity. 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.”

The tribunal ruling, for now, binds only Charge My Street. Should HMRC’s appeal fail at the Upper Tribunal, however, the floodgates will open: operators across the sector are understood to be preparing claims for overpaid VAT stretching back years, a liability that could run into hundreds of millions of pounds.

For the UK’s SME charge point operators, many of them small, founder-led businesses already grappling with grid connection delays, planning bottlenecks and capital costs, the appeal represents more than a fiscal irritation. It is, in their view, a test of whether Whitehall is serious about the commercial foundations of the net zero transition, or merely content to talk about them.

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HMRC appeals tribunal ruling that would slash VAT on public EV chargers to 5%