A court has ruled electric vehicle owners using the public charging network should benefit from a reduced 5 per cent VAT – bringing the tax on public charging in line with home charging.
The First-Tier Tribunal Tax Chamber’s landmark decision came after community charge point operator, Charge my Street, represented at the tribunal by Sarabjit Singh KC, argued against the 20 per cent tax rate currently imposed on the public charging network on advice from global professional services Deloitte.
This puts those without access to home charging at a cost disadvantage when it comes to running an EV.
Recent figures show charging an EV to 80 per cent with a 7kW home charger costs around £5.88.
But it costs almost double that – £11.30 – to charge at a slow public charging point, according to the AA’s most recent Recharge Report.
A UK court has ruled that the 5% ‘domestic’ VAT rate should apply to the EV public charging network, bringing it down from 20% currently and in line with domestic energy VAT
Posting on LinkedIn after the ‘first-tier tribunal’ win, legal representative, Oliver Jarratt, said: ‘We noticed that existing VAT law already says that the provision of less than 1,000 kWh per month of electricity to a person at any particular premises counts as ‘domestic’ – always – so we believed the 5 per cent rate already should apply to public EV charging, provided it was under that limit.
‘The first-tier tribunal has just given its judgement, ruling the 5 per cent rate indeed applies to public EV charging in those circumstances.
The decision by the tribunal was handed down in February after it heard the case last October.
It rejected arguments put forward by HM Revenue & Customs, ruling the 5 per cent rate does apply to public charging in such circumstances.
HMRC has maintained a reduced rate for electricity supplies applied only to domestic supplies of electricity to a person’s home or other ‘premises’.
Occasional electricity supplied at public charge points is not an extension of this, HMRC says.
HMRC could seek permission to appeal, but Jarratt has queried if this permission will be granted, based on ‘how strongly the Tribunal rejected HMRC’s arguments on what the terms ‘premises’ and what ‘rate’ meant’.
Daniel Heery, director at Charge My Street, said: ‘This is a hugely important outcome for communities across the UK who rely on affordable, local EV charging.
‘Our mission has always been to make neighbourhood charging accessible to everyone, and today’s ruling supports that mission.
‘Lower VAT on charging improves fairness and helps accelerate the shift to cleaner transport for all.’
Matt Waller, general manager of The Charge Scheme, said: ‘For too long, drivers without a driveway have been penalised by a VAT system that charges them four times more than homeowners for exactly the same electricity.
‘This ruling confirms what the industry has argued for years, and HMRC must now apply the five per cent rate across all public charging without delay rather than dragging this through an appeal.’
This is Money has contacted HMRC for comment.
