EV ‘pavement tax’ means it could be cheaper to get a petrol car | Personal Finance | Finance
Car drivers are being put off switching to electric vehicles by a 20 percent “pavement tax” which pushes up the cost of charging, according to motoring organisations.
The AA said the fact that the Treasury charges 20 percent VAT for people who use public charging points is unfair. And it means one of the apparent attractions of electric cars – lower bills than petrol drivers face – could in fact see some EV drivers pay more than their gas-guzzling counterparts.
The tax means it is considerably more expensive for people who do not have a driveway and home charger – and are therefore exempt from the VAT bill – to power up the battery.
The motoring organisation said: “EV drivers without a personal charger will be frustrated that the Chancellor opted to retain the ‘pavement tax’, by keeping VAT on public realm charging at 20 percent.”
Separate analysis by the RAC suggests that falls in the wholesale price of electricity have not been passed on to people using some public charging points.
The issues have been raised against the background of concerns that the take-up of electric cars in the UK is below expectations and, as a result, some manufacturers of petrol and diesel vehicles face big fines for failing to hit sales targets.
Charging at peak times on slow chargers, typically lampposts within residential areas, rose by 11p per Kilowatt hour in October compared to September. This means the cost of charging at peak times on a public slow charger is now 69p/kWh, which equates to 15.59p per mile. The cost of using a public charger during an off-peak period was a cheaper 44p per Kilowatt hour or 9.94p per mile.
By contrast using a slow 7kw home charger costs just 24p per kilowatt hour or 5.42per mile, according to the AA’s EV Recharge Report for October.
The difference in the cost is even greater when looking at the prices for using public fast chargers. For example, the average price for using a rapid public charger at peak times is put at 18.53p per kilowatt hour, which is more than three times the cheapest home charge figure.
The AA figures show the VAT “pavement tax” means that it can – in some circumstances – be more expensive per mile to use an electric car than one powered with petrol. It puts the average cost of running a petrol car at 11.53p per mile, which is more expensive that a home charged electric vehicle at 5.42p per mile, but cheaper than the most expensive public charger at 18.53p.
Jack Cousens, Head of Roads Policy for The AA, said: “While price rises are always disappointing, the difference between EV and petrol costs is that charging companies offer far more stability and uniformity compared to forecourts. We expect there to be little price fluctuation at chargers across the winter, whereas petrol drivers fear that their costs could increase daily.”
Separate figures from the RAC found prices for public rapid charging of electric vehicles (EVs) remain ‘stubbornly high’.
Average wholesale electricity prices have fallen from a high of 51p per kWh in August 2022 to under 9p per kWh at the end of the same month this year. However, the average cost of using chargers with power outputs between 50 and 149 kilowatts on a pay as you go basis is 79.19p per kilowatt hour.
RAC spokesperson Rod Dennis said: “Drivers of electric vehicles might be frustrated that the cost to use rapid or ultra-rapid chargers remains stubbornly high, despite wholesale energy prices dropping.
“But they might also be surprised to learn that the actual cost of electricity they are using when they charge up makes up a relatively small part of the total price they have to pay due to the high charges levied on the networks for grid upgrades and connections.
“Charging networks are spending enormous sums of money now to install the charging infrastructure that an increasing number of drivers will be using in the years to come, as more of us switch to EVs.
“Not all drivers depend on these fastest, high-powered chargers, but they are a crucial element of the charging mix.
“’It’s vital that public charging costs for drivers come down.”