HMRC to appeal £85m Tribunal ruling that public EV charging can benefit from 5% domestic electricity rate
The UK’s HMRC is to appeal against the March 2026 test ruling (see below) that held that individuals charging at public Electric Vehicle charge points should be only charged the domestic 5% VAT rate – and not standard 20% rate.
The Tribunal backed a loophole in the 20% rate argument based on the legislation stating that if a private individual has a moderate use of pubic electricity, then that equates to 5% domestic supply.
The cost to HMRC of losing the appeal would be £85m per annum, with the potential for back repayments.
March 2026 UK court points way to domestic reduced 5% rate on public charging electric cars
A UK First-tier Tribunal has ruled that public EV charging can qualify for the 5% reduced VAT rate, rather than 20%, under existing “de minimis” rules in the VAT Act 1994.
In the case brought by Charge My Street, the Tribunal found that where electricity supplied at a public charge point does not exceed 1,000kWh per customer per month at a specific location, it can be treated as domestic consumption. This overturns HMRC’s earlier position that public charging must always attract 20% VAT. The decision could materially reduce charging costs and influence other operators – and the UK Treasury is known to be considering harmonising the rates.
HMRC limits public charging 5% rate
This decision may be appealed by HMRC and may apply only in limited circumstances.
HMRC’s 2021 guidance note on this topic stated that the de minimis provision does not apply to public charge points because supplies are made at locations such as car parks or petrol stations, not domestic premises, and are not typically ongoing supplies to a single identifiable customer:
- The supply of electric vehicle charging via a charging point in a public place is subject to VAT at the standard (20%) rate.
- The reduced (5%) rate of VAT does not apply to supplies of electric vehicle charging at charging points in public places.
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- The reduced rate only applies to ongoing supplies of electricity to a person’s house or building which is less than 1,000 kilowatt-hours a month.
- Supplies made at places such as car parks, petrol stations and on-street parking are not made to a person’s house or building and are not usually an ongoing supply to one person where the rate of supply can be calculated.
Jan 2026: UK Treasury considers reducing VAT to 5% on public EV charging to protect demand ahead of Pay-Per-Mile Levy
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The Treasury is reportedly assessing a cut to VAT on public EV charging from 20% to 5%, aligning it with the domestic rate.
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The move aims to offset the impact of the proposed pay-per-mile levy due to begin in 2028.
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Policymakers are concerned that higher running costs could slow EV adoption, particularly for drivers without home chargers.
The UK government is understood to be reviewing whether to reduce VAT on public electric vehicle (EV) charging, amid growing concern that future road-pricing plans could undermine consumer uptake of electric cars.
In the UK, charging a car from domestic supply – e.g. on a drive – benefits from the reduced 5% rate. In April 2024, the government ruled out an EV recharging VAT cut in response to a Lords Environment and Climate Change Committee Report recommendation on the basis of the loss of tax revenues.
Treasury evaluating VAT subsidy ahead of 2028 pay-per-mile levy
According to recent press reports, Treasury officials have held discussions with industry representatives to explore how public charging costs might be reduced. One option under active consideration is lowering the current 20% VAT rate applied to public charging to 5%, bringing it into line with the reduced rate available to drivers who charge at home. This would address the long-criticised “pavement tax”, which disproportionately affects drivers without access to private driveways or home chargers.
The review comes against the backdrop of a proposed pay-per-mile levy from 2028, set at 3p per mile for fully electric vehicles and 1.5p per mile for plug-in hybrids. For the average EV driver, this could add approximately £255 per year to running costs. Internal government sources have reportedly warned that the levy risks dampening EV demand unless offset by compensating tax measures.
Public charging remains significantly more expensive than home charging, driven by higher VAT, network charges, and infrastructure costs. Industry bodies argue this price gap actively discourages urban drivers and apartment dwellers from switching to EVs, creating an uneven transition to low-emission transport.
The Treasury has indicated that it is reviewing the full cost structure of public charging, including energy prices and network fees, alongside potential VAT reforms. If implemented, a VAT reduction would signal a pragmatic policy adjustment aimed at preserving affordability, supporting the EV transition, and mitigating unintended behavioural impacts of road-pricing reform.
See more in our UK VAT guide.
