HMRC to appeal 5% VAT EV charging ruling

UK government wants to retain 20% sales tax on public chargepoints

HM Revenues & Customs (HMRC) is to appeal a Tax Tribunal ruling on 5% VAT for public charging.

Public EV charging is taxed at 20% VAT while domestic charging is at 5%, created a disparity between what is paid by those able to charge at home and those who cannot.

In February the community benefit society Charge My Street won its appeal won an appeal at the First-Tier Tribunal. Its victory was based on the assumption that public charging should fall under the “de minimis” provisions, allowing a 5% VAT rate on small-scale supplies of electricity supplied for domestic consumption.

The case revolved around an interpretation of a few lines in the VAT Act that states electricity counts as “always for domestic use” as long as one person does not use more than 1,000 kilowatt hours (kWh) a month at a single premises. Accountancy firm Deloitte discovered the discrepancy, and worked pro bono with Charge My Street.

Although the ruling only applies to Charge My Street, if the appeal fails, operators are geared up to lodge their own claims for overpaid VAT going back years.

Will Maden, 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.

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.”

Chargepoint operators say the decision to appeal will hold back the transition from petrol and diesel by penalising electric car owners who cannot charge at home.

Vicky Read, chief executive of EV charging sector body ChargeUK is disappointed at the UK government’s decision from government.

“On the same day it commits to doubling down on clean power and electrification, HMRC appeals against a legal ruling which could cut the cost of EV charging for millions,” said Read.

“Interest in EVs is surging as drivers look to shield themselves from volatile petrol prices. But for the many who cannot charge at home that equation is still not straightforward – addressing the pavement tax would help make it so.

“We urge that as government progresses its review of the cost of public EV charging, equalising VAT should remain on the table regardless of this ruling.”

Tanya Sinclair, chief executive, Electric Vehicles UK, said: “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. You let it stand. Their actions don’t match the narrative.”

John Lewis, chief executive of char.gy, said: “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. char.gy stands ready to pass on any VAT saving to our customers the moment the government does the right thing. The question is: what is the government waiting for?”

Warren Philips, campaign lead at FairCharge, said: “FairCharge has led on this issue, but consumers, industry and MPs alike have always known it was wrong. Charging people more because they depend on public infrastructure was wrong in principle, and the tribunal confirmed it. People unable to charge at home pay four times the VAT rate of their neighbours for identical electricity, a failing that persisted long after the legal basis was challenged.

“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. It should accept the ruling and work with consumers and industry to put this right.”

Luke Templer, chief financial officer of Believ, said: “Believ is hugely disappointed that HMRC has chosen to appeal. The tribunal’s initial ruling is an encouraging step towards fixing the VAT imbalance that means drivers who can’t charge on a driveway often pay more to go electric.  

“By appealing a clear and fair ruling, HMRC is prolonging uncertainty in the sector and sending the wrong message to drivers when they should be encouraging them to switch. HMRC should be allowing the industry to move forward under the legislation as it stands, so we can build driver confidence, accelerate the EV transition and deliver cleaner air for all.”

Ginny Buckley, chief executive of the Electrifying.com websites, said: “For a government that talks about standing up for ‘working people’, the decision to appeal this ruling flies in the face of that. Ministers are doubling down on a system that penalises millions of drivers who rely on public charging.

“Those drivers can pay up to ten times more to charge an electric car than someone with a driveway – and in some cases, that makes EVs more expensive to run than petrol. This hits those without driveways the hardest, making it more expensive for them to switch and if the government is serious about making EVs affordable, it cannot allow a two-tier system where access to cheaper, cleaner driving depends on what type of property you have.”