Electric Car Drivers Without Driveways Pay Four Times More VAT to Charge in Public

Charge an electric car on your own driveway and the electricity costs 5 per cent VAT. Charge the same car at a public rapid charger, simply for living in a flat or terraced house with no off-street parking, and HM Revenue and Customs has been charging you 20 per cent, four times the domestic rate, on every kilowatt hour. A tribunal ruling in March 2026 said that gap was wrong. HMRC is now appealing to keep it in place.

The case, brought by charging network Charge My Street, went before a First-tier Tribunal, which found that where a driver’s use of a specific public charge point stays under 1,000 kilowatt hours a month, that supply can legally count as domestic consumption under the de minimis rules in the VAT Act 1994. In plain terms, an ordinary driver topping up a family car at a local public charger was never supposed to be paying the standard rate at all. HMRC had been applying it anyway.

Who loses out under the 20 per cent rate

The drivers hit hardest are the ones with the least choice: people in flats, terraced streets and rented homes without a driveway or dedicated parking space to install a home charger. HMRC’s own 2021 guidance drew the line explicitly, stating that the reduced 5 per cent rate applies only to ongoing supplies of electricity to a house or building, and that charging at a car park, petrol station or on-street point does not qualify, regardless of how much or how little electricity is actually used.

That distinction has nothing to do with how the electricity is used and everything to do with where the driver lives. A household with a driveway pays domestic rates for exactly the same electricity that a household without one pays standard rate for, at a public charger a few streets away. Industry campaigners have called this the “pavement tax” for years. The Tribunal’s ruling is the first time a legal body has agreed the distinction does not hold up under existing legislation.

Roughly a third of UK households have no off-street parking, a figure that rises sharply in cities and in older terraced housing stock across the North and Midlands. Those households are disproportionately lower income, meaning the VAT gap has landed hardest on the drivers least able to absorb it. Charge My Street, the network that brought the case, was set up specifically to serve communities without private driveways, which is part of why the ruling has been read by campaigners as a direct challenge to a rule that quietly penalises exactly the households EV policy is meant to bring along. Local authorities that have partnered with community charging schemes, installing lamp-post or on-street chargers in terraced neighbourhoods, could find themselves at the centre of any future rate correction. Their networks serve precisely the driveway-less households the ruling is built around.

What HMRC stands to lose, and why it is fighting

HMRC has confirmed it will appeal the ruling. Losing that appeal would cost the Treasury an estimated £85 million a year in reduced VAT receipts, with the added risk of back-payment claims from drivers and charging operators covering previous years. That figure explains the resistance, but it sits uneasily alongside a separate policy debate already under way inside the Treasury.

Officials have been examining whether to cut the public charging VAT rate voluntarily, specifically to soften the impact of the pay-per-mile road charging levy set to start in 2028, at 3p a mile for fully electric cars. Internal government analysis has reportedly warned that stacking a new per-mile levy on top of VAT-inflated public charging costs risks slowing EV adoption just as the market needs to grow to meet emissions targets. In other words, the same government considering a voluntary cut to support EV uptake is simultaneously appealing a tribunal ruling that would deliver a similar cut through the courts.

The gap in real money

For a driver relying entirely on the public network, cutting VAT from 20 per cent to 5 per cent would save roughly £300 a year, based on typical charging costs falling from around £2,400 to £2,100 annually. That is not a small adjustment. It is the difference between public charging being broadly comparable to running a petrol car and public charging remaining a genuine financial penalty for not owning a driveway.

Reliability adds to the frustration. Motoring Chronicle has previously reported that almost no UK charging network meets the legal 99 per cent reliability requirement for rapid chargers, meaning drivers without home charging access are already paying a premium for a service that frequently does not work as promised. Add the VAT gap on top and the same driver is paying more for electricity, more often finding the nearest charger faulty, and getting none of the reassurance that a fixed home tariff provides.

The £300 figure is also an average. Drivers who rely heavily on rapid or ultra-rapid chargers on motorway corridors, where per-kilowatt-hour prices already run higher than slower street-level chargers, can lose considerably more than that to the VAT gap over a year of typical mileage. For a family without a driveway running a single EV as their main household car, the difference between the 5 per cent and 20 per cent rate can be the equivalent of several months of a typical broadband bill.

How to fight back

The Charge My Street ruling does not automatically change what any individual charging network bills you today. HMRC’s appeal means the standard 20 per cent rate remains in force at most public chargers unless and until the appeal fails or the Treasury acts first. Keep receipts for every public charging session. If the ruling is upheld on appeal, operators and drivers who can show a paper trail of qualifying sessions under 1,000 kilowatt hours a month at a single location will be best placed to pursue any refund or rate correction that follows.

Write to your MP if the VAT gap affects you directly. The Treasury’s own internal debate about cutting the rate voluntarily shows this is a live policy question, not a settled one, and MPs raising constituent cases add pressure to resolve it faster than a multi-year tribunal appeal process will.

Compare charging tariffs before you commit to a network. The 20 per cent VAT rate applies across almost all public operators, but the pre-VAT price per kilowatt hour still varies considerably between networks, and some offer cheaper overnight or subscription rates that can offset part of the gap while the appeal plays out. Apps that compare live public charging prices across networks can help identify the cheapest nearby option on any given day, which counts for more for drivers without a driveway than for anyone who can simply plug in at home.

If you are choosing a new EV and have any option to install home charging, even a shared driveway arrangement with a neighbour, the VAT gap makes that option worth roughly £300 a year more than it did before this ruling became public, on top of the usual savings from off-peak home electricity tariffs. Check whether your council or housing association offers a cross-pavement charging gully scheme, which allows a home charging cable to run safely under the pavement from a house without a driveway to a car parked on the street. Several London boroughs and a growing number of other councils now fund these schemes.

For more on the state of the public charging network, read our report on why almost no UK charging network meets the legal reliability rule, and our coverage of how the electric car grant has performed in its first year.

Sources:

• First-tier Tribunal ruling, Charge My Street VAT case, March 2026
• HMRC guidance on VAT and electric vehicle charging, 2021
• VAT Calc reporting on HMRC’s appeal and Treasury VAT review, April 2026
• Fleet News and industry reporting on public EV charging VAT debate