Ahead of the budget next week, it’s a sure bet that Jeremy Hunt’s inbox is full to bursting with ideas from the public and private sectors on what the government’s fiscal priorities should be going into the summer.
One idea that has gained traction amongst Conservative parliamentarians is for the Treasury to equalise the VAT levied on public and at-home electric vehicle charging. Home (‘off-street’) charging is currently taxed at only 5% VAT, while public (‘on-street’) is taxed at 20%. This ‘pavement tax’ penalises the 38% of British households who don’t have access to a private parking space such as a garage or driveway, who often live on denser streets and in less affluent areas.
The savings from lower running costs of owning an EV are drastically reduced without access to affordable home charging: the VAT discrepancy alone can cost EV owners who don’t have access to off-street parking an extra £555 per year.
Equalising public and private charging at 5% VAT would represent a measured, hands-off approach to making EVs more affordable and improving uptake among the wider public. As conservative environmentalists, we should look for ways to cut taxes that support our transition to net zero, making the greener choice the easier choice. Lots of businesses such as IKEA and Unilever have committed to decarbonising their fleets, and most of these will require on-street charging. Penalising the businesses and individuals that have switched to cleaner transport would send the wrong signal and potentially risk jeopardising private sector investment.
EVs are also increasingly popular. More than two thirds of UK car buyers are considering purchasing one in future, attracted by the potential cost savings, environmental benefits, and overall driving experience. Those that have already bought an EV are overwhelmingly satisfied with having made the switch.
The government should adopt the conservative environmental approach and equalise VAT on charge points so the UK can fully recognise the benefits that switching to electric vehicles can bring.
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