Andy Burnham’s £40 driveway rule change introduced this October has been extended by John Healey, with motorists now able to save money until next summer. Mr Burnham slashed VAT rates on domestic electricity fees from October 1, with rates cut from 5% to 0% to help family electricity bills. However, the plan had a knock-on effect on electric car owners who charge at home on their driveway, with EV drivers making savings. A discounted VAT rate means the cost of charging is less.
Experts at Andersen EV previously suggested EV owners could save around £20 under the change, although they have previously predicted that high-mileage drivers could save as much as £40 due to the rule. Originally, Labour’s VAT cut was only funded until the end of the financial year in April, but the policy has now been extended by John Healey, with the decision confirmed in his Autumn Budget.
Speaking in the House of Commons, Mr Healey said: “In the first week of this new Government we took VAT off electricity for 29 million households. Today, I’m expecting that VAT cut through the winter and spring to July.”
The extension means that motorists charging at home on their driveway can top up for as little as 7p per kWh or 2p per mile. Labour has cut red tape on cross-pavement solutions, meaning those who don’t have a driveway can still take advantage of domestic electricity tariffs through measures such as pavement gullies.
Although planning permission is cut for many, local permission is still required to install them and there will be no change for motorists living in one of 10,000 conservation areas. Ahead of the Budget, there had been calls from motoring experts to reduce VAT on public electric vehicle charging from 20% to 5%, but this was not confirmed by Mr Healey in his Budget statement.
This means the “driveway divide”, the gap between home and public VAT charging rates, will remain at 20%.
Reacting to the news, AA President Edmund King said: “The Chancellor has missed the chance to help accelerate the transition to electric cars by retaining the 20% VAT rate on public charging. Around two-fifths of households do not have any form of dedicated off-street parking, and retaining the difference in VAT rates only widens the pavement tax.
“Even more so considering that VAT on domestic energy is temporarily held at 0% to 1 July 2027 which is welcome and reduces the cost of home charging.”
