EV Home Charging Becomes a Little Cheaper, For Now
New Prime Minister Andy Burnham has announced his first policy this morning, cutting VAT on domestic electricity bills by 5% to 0% from 01 October 2026 for a period of 6 months.
It means that for anyone with an electric car, that is being charged at home, they will see a small reduction in charging costs, which is welcome news from the tax raid on EVs introduced by the previous Chancellor, Rachel Reeves.
The Prime Minister said “VAT on electricity bills is to be removed from 1 October, estimated to cost £850m, will be funded by his decision to scrap the previous government's £1.8bn digital ID programme.”
Ofgem has quoted this will reduce household electricity bills by around £45 yearly (or £22.50 for the 6 months it is being proposed for), but Ofgem has not quoted the consumption figure that was based on.
For typical EV drivers, using 2,000 kWh of home charging, at 8p per kWh on a time-of-use tariff, the reduction to 0% VAT should save around £8 per year. Although any reduction in tax, and subsequently cost, is welcome news, this is more of a quick headline grabber than a policy with any meaningful impact given that eVED will swallow around £300 per year (for drivers covering 10,000 miles) from your bank account when it’s introduced in under 2 years time.
What is needed is for the cost of public charging to be reduced and potentially capped, because often there is such a large disparity between public charging networks, with some at half the cost of others. On the higher end of public charging costs, it can cost more than running a diesel car if drivers relied solely on expensive rapid chargers.
And as the conflict in the Middle East rages on, petrol and diesel costs will not be coming down anytime soon, and a marginal increase in the cost of liquid fuels can hit the wallet hard. So, the new Government has much work to do to bring down the cost of energy, which remains high in the U.K.
If anyone is struggling with petrol and diesel costs, we put together an article on How to Save on Fuel Costs earlier in the year.
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About the Author
Graeme Cobb is a lifelong car enthusiast with a passion for writing about cars, EVs, industry updates and more.
You can find Graeme on 𝕏 at @graeme_cobb
