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EV 'Pavement Tax' Could End as VAT Slashed
13 Jan
Summary
- VAT on public EV charging may drop from 20% to 5%.
- This aims to equalize costs for drivers without home chargers.
- The move is partly a response to upcoming pay-per-mile taxes.
The UK Treasury is reportedly exploring a substantial cut to VAT on public electric vehicle (EV) charging, with proposals suggesting a reduction from the current 20% down to 5%. This significant shift aims to address the 'pavement tax,' which disproportionately affects EV owners without access to home charging. The initiative seeks to equalize charging costs across the board.
This potential VAT reduction is being prioritized due to mounting anxieties within the Treasury regarding the impact of the upcoming pay-per-mile road pricing scheme. Scheduled to be implemented in 2028, this scheme is expected to significantly increase the annual cost for EV drivers, potentially stifling demand. Officials are reportedly consulting with industry experts to gauge the full effect of these changes.
The government acknowledges the need to incentivize EV adoption, with current measures including a £3,750 discount on new EVs and substantial investment in the sector. The proposed VAT cut on public charging is seen as a crucial step to mitigate the financial impact of the new road tax and ensure the transition to electric vehicles remains attractive and accessible.
