Many electric car owners have called on the Government to introduce VAT changes to help support the public charging network. It is hoped a move to cut VAT would also help a large number of electric car owners save money during the cost of living crisis.
The VAT rate on electricity from public chargers is 20 percent, whereas the VAT rate on electricity from home chargers is only five percent, hence a pavement tax of 15 percent.
Public charging prices can also be up to ten times higher than charging at home, and lead to the public becoming increasingly weary of the switch to EVs.
Ahead of the Chancellor’s Spring Budget, Hiten Sonpal, Head of Green Finance at MHA, urged the chancellor to be bolder with his green initiatives.
He said that reducing VAT on public charging for electric vehicles from 20 percent to five percent so it aligns with the rate for domestic charging is a “must for the Chancellor”.
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Mr Sonpal added: “Drivers with off-street parking currently only pay five percent VAT.
“This pointless disparity discriminates against drivers without driveways or garages and risks undermining the UK’s net zero strategy and dampening the recent growth of EV sales.
“It’s also imperative the Government intervenes to simplify the planning process for charging stations and improves the UK’s EV grid capacity.
“Working with local authorities to speed up the process of installing charge points installation should be a Government priority.”
He said this was in addition to collaborating with distribution network operators to subsidise the cost of grid upgrades at project sites.
Some market projects currently take up to two years to develop, causing the UK’s EV infrastructure to lag behind consumer demand.
This comes after a group of cross party MPs and Peers sent an ope letter to the Chancellor to abolish the “pavement tax” to help boost EV adoption.
The politicians are supporting the call of the FairCharge campaign for the Chancellor to slash VAT on electricity from public chargers from 20 percent to five percent to end this unfair situation.
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A recent report by Conservative MP Chris Skidmore into what the Government needs to do to meet its climate goals also calls for a cut in VAT.
Derek Thomas, Conservative MP for St Ives, West Cornwall and the Isles of Scilly, said it was essential for the barrier to be removed.
Low carbon companies already contribute £70billion and 840,000 jobs to the economy, according to the Confederation of British Industry.
Hiten Sonpal continued, saying that the Government should use the Spring Budget to go further and faster on its commitments to sustainability.
However, Mr Sonpal argues, with greater investment and sector support they could underpin the Government’s levelling up strategy and help meet the UK’s 2050 net zero aims.
He concluded: “The Chancellor should grasp the nettle and provide greater incentives for businesses to become green and install renewable energy solutions, particularly high emitting sectors such as commercial real estate.
“Doing so would improve energy efficiency, support the overall net zero strategy and alleviate the pressure businesses are facing with energy prices four times higher than 12 months ago.”
Chancellor Jeremy Hunt will unveil the new Spring Budget on Wednesday, March 15, with many looking to see if he makes lives easier for EV drivers.