Andy Burnham oversaw the introduction of a new 2.3p per mile driveway rule earlier in October, with Labour now confirming the plan will remain in place much longer. Mr Burnham announced plans to cut VAT on domestic electricity supply from October 1, reducing the rate from 5% to 0%. This has had a knock-on effect on electric vehicle owners, with drivers set to pay less to top up their batteries at home.
The rule was expected to come to an end at the close of the financial year in April, although Chancellor John Healey has confirmed the discount would stay in place until July in his Autumn Budget. Matt Galvin, managing director of Polestar UK, stressed the update would mean motorists charging at home could continue to take advantage of cheap rates, with those on an off-peak smart tariff paying just 2.3p per mile.
Matt said: “Extending the VAT cut on household electricity is good news for drivers who can charge at home, keeping costs to around 7p a mile on a standard tariff and as little as 2.3p off-peak.” Andersen EV previously warned that ordinary EV owners could save around £20 per year with the latest VAT cut, while high-mileage drivers could save £40 per year.
However, Mr Healey didn’t fix the so-called “driveway divide”, with motorists charging in public still set to pay 20% VAT rates. Using public plugs could cost road users up to 50p per kWh, likely making EV ownership unaffordable for many.
Previous analysis has suggested that as many as nine million households in the UK don’t have off-street parking. Although Labour have relaxed planning permission rules for cross-pavement solutions in a bid to help EV owners without off-street parking, this still raises issues.
Motorists still need to secure local permission, while some living in conservation areas will still need formal planning permission to install cables.
Many in the motoring industry had called for a reduction in public VAT rates to bring the two rates into line, but Mr Healey did not introduce this on Wednesday.
Matt added: “For the one in three drivers without a driveway, this Budget is yet another missed opportunity. They are still paying 20% VAT at public chargers, while those charging at home currently pay nothing. Instead of setting out a plan to end this driveway discrimination, the Chancellor is legislating to lock it in.”
