Electric vehicle drivers without access to home charging are collectively paying an estimated £172 million a year in VAT on public charging, according to analysis from New AutoMotive.
The transport research organisation said the figure highlights a growing fairness issue in the UK’s transition to electric vehicles, with renters and households without driveways facing higher charging costs than drivers able to plug in at home.
Domestic electricity is charged at 5% VAT, while electricity supplied through public EV charge points is generally charged at 20% VAT. HMRC confirmed in a May 2026 Revenue and Customs Brief that its current policy remains to apply the standard rate to public charging, although a tribunal decision on the issue is subject to appeal.
Drivers without home charging pay most
New AutoMotive’s analysis uses DVLA, DVSA and Department for Transport driver data, alongside MOT mileage data and charging price data, to estimate how the tax burden falls across different types of EV driver.
The research divides the UK’s 2.2 million battery electric vehicle drivers into four groups.
- Drivers with a dedicated home charger on a cheap EV tariff save around £13 a year from the domestic electricity VAT cut, but still pay £42 in public charging VAT.
- Drivers with a dedicated home charger on a standard tariff save around £27 a year, while paying £62 in public charging VAT.
- Drivers using informal home charging methods, such as extension leads or pavement charging solutions, save £21 but pay £113 in public charging VAT.
- The 9% of drivers with no home charging at all, around 200,000 people, save nothing and pay an estimated £216 a year in VAT on public charging.
New AutoMotive said that in every group, VAT paid on public charging exceeds the savings from the domestic electricity cut. For drivers with no home charging, the saving is zero.
“The Government have handed EV drivers with a driveway a tax cut on power they were already paying least for,” said Ben Nelmes, chief executive of New AutoMotive.
“Meanwhile the driver charging on a public charger down the road, because they’ve got nowhere else to plug in, is still handing 20% to the taxman on every single mile. That’s a design flaw.”
Public charging remains a cost barrier
The VAT gap has become a prominent issue for charge point operators, EV groups and drivers who rely on kerbside or destination charging.
Public charge point operator char.gy, which focuses on residential on-street charging, has previously described the issue as a “two-tier charging problem”.
“Public charging isn’t a lifestyle choice for millions of drivers, it’s the only option they’ve got,” said John Lewis, CEO of char.gy.
“Taxing that at four times the rate of home charging punishes exactly the people the switch to electric is supposed to work for. If we want a fair transition, VAT can’t keep treating a driveway as a tax break.”
New AutoMotive said the policy risks disproportionately affecting people in cities, renters, flat dwellers and households without off-street parking.
Calls for wider charging reform
New AutoMotive said equalising VAT rates between home and public charging would help address the tax imbalance, but warned that VAT cuts may not always be passed on directly to drivers.
The group is also calling for measures to reduce the underlying cost of electricity sold at public charge points.
Its recommendations include expanding time-of-use tariffs at public chargers, reforming grid connection costs for charge point operators, speeding up access to cross-pavement charging solutions and deploying smart charging and vehicle-to-grid technology in high-density areas.
“This analysis shows the real difference that even a relatively small reduction in electricity costs can make to drivers,” said Vicky Edmonds, CEO of EVA England.
“Far more significant reform is now needed so every driver can truly benefit from EV, not only those with a driveway.”
New AutoMotive estimates that if domestic electricity VAT returns to 5% as scheduled, equalising public charging VAT to match would cost £120 million in lost revenue, compared with £40 million raised from EV charging on the domestic side.
FAQs
Why do EV drivers without driveways pay more VAT?
Drivers who charge at home pay 5% VAT on domestic electricity, while drivers using public charge points generally pay 20% VAT.
How much VAT do public-charging EV drivers pay?
New AutoMotive estimates that UK EV drivers collectively pay £172 million a year in VAT on public charging.
Who is most affected?
Renters, flat dwellers and drivers without off-street parking are most affected because they are more likely to rely entirely on public charging.
What changes are being proposed?
New AutoMotive is calling for lower public charging costs through VAT reform, time-of-use tariffs, grid connection reform, cross-pavement charging and smart charging technologies.
