Analysis has shown that the UK Government has committed more than £13 to keep petrol and diesel cheaper for every £1 allocated to making public EV charging more affordable.
The study from independent transport research organisation New AutoMotive of the Treasury’s Budget policy costings shows that extending fuel duty relief will cost the Exchequer £1.35 billion across 2026/27 and 2027/28, compared with £100 million committed over two years to reducing the cost of local public EV charging.
The disparity comes as the UK Government extends the existing 5p-per-litre fuel duty cut until July 2027, while confirming that public EV charging will remain subject to 20% VAT.
The Government’s £100 million commitment is intended to reduce the cost of local, lower-powered public charging, with estimated savings of around £150 annually for eligible drivers from spring 2027. A new taskforce will also examine whether motorists could use their domestic electricity tariffs at local public chargers.
However, neither measure delivers an immediate reduction in public charging VAT, while the funding does not directly address the economics of ultra-rapid charging infrastructure, it said.
The Budget also extends the temporary 0% VAT rate on domestic electricity until July 2027, leaving motorists reliant on public charging facing a substantially higher tax rate than those able to plug in at home.
The decisions also come ahead of the planned introduction of mileage-based Electric Vehicle Excise Duty from April 2028 and further increases in company car tax rates.
Industry leaders warn that the combination of unequal charging taxation and additional motoring costs risks undermining confidence in the transition, particularly among households without access to off-street parking.
The industry is calling for a more consistent approach to motoring taxation that protects motorists from high costs while making cleaner alternatives affordable and accessible to everyone.
Tanya Sinclair, CEO of Electric Vehicles UK, said:
“The Chancellor is throwing good money after bad. Instead of investing in a future where drivers are less exposed to volatile oil prices, he’s spending billions cushioning the cost of staying dependent on them.
“Nobody wants motorists paying more at the pump, but there is a difference between protecting drivers today and helping them escape high fuel costs tomorrow. Keeping public charging VAT at 20% while extending fuel duty relief is a missed opportunity to make cleaner motoring fairer. The Government talks about making the switch to electric easier, but its tax policy tells a very different story.”
Oliver Brighton, CFO of char.gy, said:
“The Chancellor has found room to extend tax relief for petrol and diesel drivers, but not to fix the unfair tax treatment of public EV charging. If you have a driveway, your electricity attracts 0% VAT for now. If you don’t, you’re charged 20% at a public charger. It’s the same electricity powering the same type of car. Why should where you park determine how much tax you pay? The Government has acknowledged the problem, but today’s Budget leaves that fundamental unfairness untouched.”
Ginny Buckley, Chief Executive of Electrifying.com, the electric car buying and advice site, said:
“Imagine paying more tax on electricity simply because you don’t have a driveway. That’s effectively what millions of EV drivers are being asked to accept.
“The Chancellor has extended relief for petrol and diesel motorists while leaving public charging VAT at 20% and extending zero VAT on home electricity. The Prime Minister talks a lot about fairness, but it’s hard to see the fairness in that.
“We should be making electric cars an easy choice for ordinary families. Instead, we’ve got a confusing patchwork of promises, with the biggest savings still reserved for people who can plug in at home.
“Electrifying.com exists to make electric car ownership easy to understand. But even we’re struggling to make sense of the government’s approach. What chance does that give someone simply trying to work out whether they can afford to go electric?”
Image courtesy of Green Car Guide
