EV industry demands Kwarteng makes ‘immediate’ VAT cut on chargers

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A coordinated open letter has been sent to Chancellor Kwasi Kwarteng calling on him to immediately cut VAT on public charging or risk the roll-out of the charging network stalling. The letter was signed by 23 of Britain’s largest public electric car charge point operators including Osprey, Instavolt, IONITY, Connected Kerb and Zap-Map.

The letter states that there is a “severe threat” to the Government’s ambition to decarbonise transport with the switch to electric vehicles.

This is because of the “high and volatile” electricity costs affecting the development of a comprehensive public charge point network.

Rising electricity prices will make it more expensive to drive a zero emission vehicle, weakening one of the primary motivations for drivers to make the switch.

Electricity supplied at EV charging points in public places is subject to the standard rate of VAT which is 20 percent.

In comparison, those who charge their vehicles at home only see a five percent VAT rate.

The letter said that this was particularly relevant for the public charging network and is already having “material impacts on future investment plans”.

It added that there is a “quick solution, which is totally within your control”, which would be to call for an immediate cut in VAT.

FairCharge, headed by EV expert and former Top Gear host Quentin Wilson, authored the letter and has called for major changes in the past.

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The letter stated: “Such a cut would immediately feed through to a reduction in prices. Further, it would show the strength of the Government’s continued commitment to transport decarbonisation. 

“Fundamentally, it would remove the current VAT anomaly that results in those living in terraced houses or flats who need to use our networks who pay 20 percent VAT as opposed to those with the ability to charge at home who pay five percent VAT.

“We urge you to take this simple, relatively low-cost intervention now.”

It is estimated that about 40 percent of households do not have access to off-street parking or are in rental accommodation so are not able to charge their EV at home.  

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Last week, Osprey Charging, one of the UK’s largest public charging networks, announced it would be increasing its charging prices.

In a statement from its CEO, Ian Johnston, it was revealed that the company would increase its rapid charging rate to £1 per kWh.

The price hike was described as “unavoidable”, and now makes Osprey the most expensive major charge point operator.

However, as a result of the newly announced Energy Bill Relief Scheme for businesses, costs may soon fall.

Mr Johnston described it as “encouraging”, adding that drivers should “watch this space”.

There were previous calls to reduce the rate of VAT on public chargers in March, which was ruled out by the Government.

It said a lower rate of VAT was used for homes to “keep costs down for families”.

VAT makes a significant contribution towards the public finances, raising around £130billion in 2019/20.

It also helps fund the Government’s priorities including the NHS, schools, and defence.

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