Transport Secretary Heidi Alexander (Image: Getty)
Transport Secretary Heidi Alexander was urged to tackle an unfair “electric car tax” which means some drivers will pay more than others to power their vehicles.
Ms Alexander met electric car manufacturers yesterday to stress that the Government would press ahead with ending the sale of new cars powered solely by internal combustion engines by 2030, reversing a delay of five years introduced by the last Conservative government.
But motoring organisation the RAC warned action was needed to deal with a two-tier charging system which means motorists in homes without driveways will be pay more. Currently the Government charges VAT of 20% on energy provided through public electric car charging points, higher than the 5% VAT paid by households able to fit a private charging point at home.
In practice it means motorists who don’t have off-road parking will pay more. Industry experts say these often tend to be people on lower incomes.
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RAC senior policy officer Rod Dennis said: “The availability of EV charge points is improving at pace. However, it’s also important that affordability is addressed, especially for anyone without a driveway who can’t charge cheaply at home.
“There is still a huge gulf in prices between public and home chargers, partly due to the higher rate of VAT at public charge points compared to the 5% domestic rate. Charge point installations and cheaper public charging costs are two sides of the same coin when it comes to ramping up private electric vehicle demand.”
Using a public charger is significantly more expensive than powering up a car at home. The RAC estimates that a large battery can cost around £20 to fully charge on a driveway compared to £60 using a public rapid-charging device.
The Government hopes to install 300,000 chargepoints by 2030. Giant batteries will be installed at some motorway service stations so that power can be stored overnight, allowing large numbers of vehicles to be charged at peak times.
But the disparity in taxes has also alarmed trade body Charge UK, which represents chargepoint suppliers and told a Commons inquiry the tax was putting motorists off switching to electric cars. It said: “The current tax framework supporting decarbonised transport is unintentionally hindering the rollout of charging infrastructure and limiting EV adoption for many households.
“The disparity in VAT rates, with public charging taxed at 20%, compared to 5% for home charging, creates a significant inequity for households without access to driveways who rely on public charging infrastructure.”
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Manufacturers are also concerned about the Government’s decision to impose vehicle excise duty on electric cars for the first time from April 1.
Industry body the Society of Motor Manufacturers and Traders (SMMT) said this contributed to a fall in car sales with 139,345 new cars registered in January compared with 142,876 during the same month last year.
SMMT chief executive Mike Hawes said: “January’s figures show EV demand is growing, but not fast enough to deliver on current ambitions.
“Affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers.”
The Department for Transport says 2024 was a record year for motorists switching to electric cares with 382,000 electric vehicles sold and a record year for chargepoints with nearly 20,000 public chargers added.
The DfT is investing more than £2.3 billion to support the sector and help consumers make the switch.
In December 2024 the National Audit Office said the Government was on track to deliver around 300,000 chargepoints which is the number estimated to be needed to support EV drivers in 2030.
Charging infrastructure will continue to match the rising sales of EVs, with another 100,000 chargers planned by local authorities all across England under the Government’s £381m Local EV Infrastructure Fund.