Drivers of petrol cars may end up with lower bills compared to some electric vehicle (EV) owners, all because of a tax rule that’s turning out to be quite a costly affair. The AA has highlighted that a 20 percent Value Added Tax (VAT) on public EV charging points is making it more expensive for drivers without a driveway and a home charger to power up their electric vehicles.
As the UK pushes towards a greener future, motoring organisations are expressing concerns that this “pavement tax” is discouraging drivers from transitioning to electric vehicles. The AA points out the unfairness of charging 20 percent VAT on public charging points, especially for those who do not have the luxury of a home charger that is exempt from VAT. Surprisingly, this means that certain petrol car drivers could actually pay less for their fuel compared to some EV owners.
The RAC has also flagged an issue where reductions in wholesale electricity prices are not leading to lower costs at public charging stations. The concern arises amidst worries that the uptake of electric cars in the UK is slower than anticipated, which could result in significant penalties for manufacturers of petrol and diesel vehicles who miss sales targets.
Recent data shows that charging costs have been on the rise, with slow chargers experiencing an 11p per Kilowatt-hour increase in October. This surge in costs impacts drivers using slow chargers typically found on lampposts in residential areas. Peak time charging on public slow chargers now costs 69p per Kilowatt-hour, translating to 15.59p per mile, while off-peak rates are at 44p per Kilowatt-hour or 9.94p per mile.
The AA’s EV Recharge Report for October reveals that using a slow 7kw home charger is significantly cheaper, costing only 24p per kilowatt-hour or 5.42p per mile. In contrast, public fast chargers come with a much heftier price tag, with the average cost at peak times hitting 18.53p per kilowatt-hour – more than three times the cost of home charging. This discrepancy underscores the financial burden some EV drivers face.
The introduction of the VAT “pavement tax” has brought about scenarios where running an electric vehicle could be more expensive per mile than driving a petrol-fuelled car. The report indicates that the average running cost for a petrol car is 11.53p per mile, making it cheaper than using the priciest public charger but more expensive than home charging for EVs at 5.42p per mile.
RAC’s analysis further reveals that costs for public rapid charging of EVs remain notably high despite a drop in wholesale electricity prices. While wholesale prices have decreased significantly, the average tariff for pay-as-you-go chargers ranging from 50 to 149 kilowatts remains steep at 79.19p per kilowatt-hour. This discrepancy raises questions about the pricing structure for charging electric vehicles and the overall affordability for drivers.
Amidst these concerns, Jack Cousens, Head of Roads Policy for The AA, points out that while price fluctuations are disappointing, EV charging companies provide more stability and consistency compared to traditional petrol stations. He anticipates minimal price changes at chargers throughout the winter, unlike petrol prices that could fluctuate daily, causing uncertainty for petrol car drivers.
RAC spokesperson Rod Dennis emphasises the need for public charging costs to decrease, highlighting the significant investment charging networks are making to expand infrastructure to meet the growing demand for EVs. As more drivers transition to electric vehicles, the affordability and accessibility of charging points will play a crucial role in accelerating the adoption of cleaner transportation options across the UK.