A UK court has ruled that the 5% ‘domestic’ VAT rate should apply for charging an electric vehicle (EV) on the public network, instead of the 20% currently paid by drivers.
Community charge point operator, Charge my Street, had argued against the 20% rate based on advice from tax experts at Deloitte.
Deloitte noticed that existing VAT law already says that the provision of less than 1,000kWh per month of electricity to a person at any particular premises counts as ‘domestic’ and believed the 5% rate already should apply to public EV charging, provided it was under that limit.
Oliver Jarratt, director and solicitor, and VAT specialist for Litigation Advisory and Settlement Group at Deloitte Legal, explained that even if an EV driver always charged at the same public charge point, it would be “nigh-on impossible” to exceed 1,000kWh per month.
Publishing its decision this week, the First-tier Tribunal, which heard the case last October, ruled that the 5% rate applies to public EV charging in those circumstances, rejecting arguments put forward by HMRC.
Daniel Heery, director at Charge My Street, said: “This is a hugely important outcome - not just for Charge My Street, but for communities across the UK who rely on affordable, local EV charging.
“Our mission has always been to make neighbourhood charging accessible to everyone, and today’s ruling supports that mission.
“Lower VAT on charging improves fairness and helps accelerate the shift to cleaner transport for all.
“We rely on investment from ordinary EV drivers to extend our charge point network, and this result helps the commercial case for our current share offer.”
Writing on LinkedIn, Jarratt said: “The judgment is clear, unequivocal and a thumping victory for Charge My Street.”
While HMRC could seek permission to appeal, he queries if permission would be granted given, he says, “how strongly the Tribunal rejected HMRC’s arguments on what the terms ‘premises’ and ‘rate’ meant”.
He added: “This is fabulous news not only for Charge my Street, led by Daniel Heery and Will Maden (who both appeared as witnesses), but also for the wider EV charging industry.”
Matt Waller, general manager of The Charge Scheme, also welcomed the First-tier Tribunal decision. He said: “For too long, drivers without a driveway have been penalised by a VAT system that charges them four times more than homeowners for exactly the same electricity.
“This ruling confirms what the industry has argued for years, and HMRC must now apply the 5% rate across all public charging without delay rather than dragging this through an appeal.”
HMRC previously issued a briefing note in 2021 around the VAT liability for EV charging through charging points in public places.
It stated that there is “no exemption or relief that reduces the rate of VAT charged”, based on “the de minimis provision”.
There is a reduced rate of VAT for supplies of small quantities of electricity, known as “de minimis”, but this provision only applies if the supply of electricity is ongoing, to a personʼs house or building and is less than 1,000kWh a month.
It explains that the de minimis provision “does not apply to supplies of electric vehicle charging at charging points in public places”.
“This is because these supplies are made at various places such as car parks, petrol stations and on-street parking, not to a personʼs house or building.
“In addition, these supplies are not usually an ongoing supply to one person where the rate of supply can be calculated.”
Daniel Barlow, tax partner at Deloitte, says that the Tribunal interpreted the de-minimis provision in Note 5(g), Group 1, Schedule 7A, VAT Act 1994 as “applying the 5% reduced rate of VAT to supplies of electricity at public EV charging locations where the amount of electricity supplied is below 1,000 kilowatt hours per month per customer at each location”.
Reacting to the Tribunal's decision, Lorna McAtear, deputy chair at the Association of Fleet Professionals (AFP), said: “It’s been an AFP objective featured for some time in our Tax Manifesto to get VAT reduced on public charging and, while the implications of the Charge my Street decision are not yet clear, it could prove a staging post towards that objective.
“As it stands, however, this judgement only applies in very limited circumstances and could yet be appealed. We are watching the situation with interest.”
An HMRC spokesperson told Fleet News that it is “carefully considering the decision” and its “next steps”.
