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The Guardian World1 min read
UK to appeal against tax ruling cutting VAT on public electric car chargers to 5%
TL;DR
The UK plans to appeal a tax ruling that would reduce VAT on public electric car chargers from 20% to 5%. This decision follows a judge's finding that the tax authorities have been overcharging for years, impacting electric car drivers' costs.
Key points
- UK tax authorities are appealing a VAT ruling
- Ruling would cut VAT on public electric car chargers to 5%
- Judge found overcharging for years under the law
- Appeal could impact electric car drivers' costs
- Higher VAT at public chargers compared to home charging
The UK’s tax authorities have decided to fight against a ruling that would cut VAT across all public electric car chargers, despite a judge finding they have been overcharging for years under the law.
Charge My Street, a not-for-profit charging company, last month argued successfully that VAT should have been charged at 5%, rather than 20%, in a case at a London tax tribunal that could have a significant impact on electric car drivers’ costs. HM Revenue and Customs on Tuesday confirmed it will appeal against the ruling.
The appeal will effectively mean the government arguing to extend a disparity that costs some electric car drivers much more to recharge their vehicles, disincentivising the shift away from petrol and diesel.
Charge point operators said the decision to appeal will hold back the transition from polluting petrol and diesel by penalising electric car owners who cannot charge at home.
Electric car drivers have long complained they have to pay an unfair rate of VAT at public chargers. People plugging in at home pay only 5% VAT on electricity for domestic use, but the 20% rate for businesses applies at public chargers.
Campaigns to equalise the rates have appeared forlorn for years, with successive governments unwilling to lose out on future electricity VAT revenues to replace the £24.5bn in annual fuel duties applied on petrol and diesel sales. However, a London tax tribunal last month found that the 5% rate should in fact have applied all along – to the surprise and delight of the EV charging industry.
The VAT difference brings in an extra £85m a year for the Treasury, according to calculations by Zapmap, a charger map company. However, that is projected to rise to £315m by 2030 and billions after that as the number of electric cars rises.
The government does not appear so pleased. If the ruling is upheld it will put the Treasury in a tricky spot, amid fiscal pressures caused by the Iran war and pressure to abandon a planned fuel duty hike. The government is already committed to introducing pay-per-mile taxes on all electric cars.
Will Maden, a director at Charge My Street, said: “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 I think we should be making the transition to EVs as cheap as we can. This is an environmental issue.”
Q&A
Why is the UK appealing the VAT ruling on electric car chargers?
The UK is appealing to maintain the current 20% VAT rate on public electric car chargers, despite a ruling that found the rate should be 5%.
What impact does the VAT ruling have on electric car drivers?
The ruling could significantly reduce charging costs for electric car drivers, who currently face higher VAT rates at public chargers compared to home charging.
How long have electric car drivers been overcharged on VAT?
Electric car drivers have been overcharged for years, as the judge ruled that the VAT on public chargers should have been 5% instead of the current 20%.
What are the consequences of maintaining the 20% VAT on public chargers?
Maintaining the 20% VAT will likely disincentivize the transition to electric vehicles by increasing costs for drivers who cannot charge at home.
