The issue around public electric vehicle charging being at 20% VAT will not be considered in the Office for Zero Emission Vehicles’ (OZEV) price of public charging review.
The news comes as the UK Government organisation announced its terms of reference for its review, which will be led by Philip New.
It will focus on the cost of public charging and how it could change without intervention, the cost of charging relative to ICE vehicle refuelling, and the cost savings from possible policy shifts.
The review will also assess three impacts on the costs to other energy consumers; fleet operators charging at depots; and access to domestic charging.
But it will not look at the disparity between the 5% charging cost for VAT on domestic energy against the 20% VAT for public charging, and it follows the UK Government appealing the Tax Tribunal’s decision that the 5% VAT rate should apply to public charging – under “de minimis” provisions, where small-scale supplies of electricity are supplied for domestic consumption.
Options and recommendations from the review will be broken down into regulation, government funding, wider government policies, market-based trading schemes, and dynamic pricing.
The report will be also be split into three sections on government and industry interventions to reduce costs, a review of current costs and how these have changed, and an assessment of how it could change in the future.
It is due to report back in the autumn of this year.
OZEV, a joint unit between the Department for Transport and the Department for Energy Security and Net Zero, will report to ministers in these departments, as well as His Majesty’s Treasury.
The review will be developed in collaboration with Ofgem, given its responsibilities for energy sector regulation in Great Britain, it added.
Where relevant policy is devolved, the review will also consider impacts and outcomes with the devolved governments.
Speaking about the review, Head of Electrical Transport Systems at BEAMA, Matt Adams, said:
“It’s difficult to see how a review focused on the cost of public charging can deliver its full potential, when it has already ruled out making recommendations on tax policy.
“Aligning VAT rates between public and domestic charging has long been one of the most widely discussed options for reducing charging costs. By ruling out tax policy recommendations from the outset, Government risks missing an important opportunity to address one of the most persistent cost barriers facing EV drivers.
“With eVED due to come into force in 2028 which effectively increases the cost of owning an EV, now is precisely the time to be considering every option available to improve affordability.
“Our analysis suggests eVED could cost the UK more than £4 billion a year in tax revenue by pricing drivers out of making the switch to electric vehicles.”
Image courtesy of Green Car Guide
