Andy Burnham will cut VAT rates on domestic electricity charging from 5% to 0% from 1 October 2026, helping electric car owners who charge at home pay as little as 1.89p per mile
Andy Burnham is set to implement a new rule change impacting motorists with driveways in just a few days, with the updates taking effect from 1 October. The new Prime Minister will reduce VAT rates on domestic electricity charging from Thursday, with rates due to be cut from 5% to 0%.
This move is designed to assist families struggling with escalating electricity bills amidst the cost of living crisis, but it will also benefit electric car owners who charge their vehicles at home.
LeaseElectric has indicated that under the new rule, road users can expect to see the average cost of charging their EV on their driveway reduced.
Taking the Volkswagen ID. 3 150kW Match Pro S 79kWh 5dr Auto as an example, LeaseElectric stated that road users topping up with the EDF Energy Go Electric with Pod Point tariff will now pay just 1.89p per mile to use the roads, down from the previous rate of 1.97p.
Over a distance of 10,000 miles, this discount means road users will pay around £189 to use the road, instead of £198. However, costs will fluctuate depending on the specific tariff chosen by road users, reports the Express.
Those charging the Volkswagen EV using the Good Energy EV Tariff could pay as little as 1.47p per mile, down from 1.54p per mile prior to the reduction.
LeaseElectric commented: “For millions of households, this means lower electricity bills heading into winter. For electric vehicle drivers, however, it means something even more significant: charging an electric vehicle at home is about to become even cheaper.
“Because most EV owners charge their vehicles at home, removing VAT from domestic electricity means every home charge will cost less from 1 October 2026.”
Experts at Andersen EV have previously cautioned that some high-mileage drivers could pocket savings of up to £40 per annum due to the new VAT changes. However, it’s not all good news, particularly for those without a driveway or off-street parking who rely on public charging bays.
Electricity fees won’t be reduced at public plugs, with motorists expected to pay 20% VAT to top-up. This new rule signifies a widening “driveway divide” between home rates.