One of the most annoying unfairnesses in UK EV running costs has not been the price per kWh. It has been the VAT.
Historically, home electricity is 5% VAT, while public charging has typically been 20% VAT. That creates a built-in cost gap for drivers who rely on on-street and public charging, and it makes cost-per-mile comparisons messy.
In late February 2026, a First-tier Tribunal (Tax Chamber) decision in a case brought by community chargepoint operator Charge My Street challenged that position. The tribunal found that, in certain circumstances, the reduced 5% VAT rate can apply to electricity supplied at public EV charge points.
This is not the same thing as "VAT has changed overnight". But it is a genuinely useful development for drivers, fleets, and anyone who wants their running costs to reflect reality.
What was the tribunal actually saying?
The simplified version is:
- UK VAT law has a reduced rate for small quantities of electricity supplied to a person at a particular premises (often discussed as the 1,000 kWh per month "de minimis" threshold).
- HMRC's historic line was that public charging did not qualify in the way home supplies do.
- The tribunal disagreed with HMRC's interpretation in the Charge My Street case, and allowed the appeal in principle, with further determination needed about which supplies qualify.
TransportXtra's summary of the decision highlights the tribunal's interpretation of the de minimis provision in UK VAT law, including the idea that supplies below the 1,000 kWh threshold at a particular location can fall under the reduced rate.
VATupdate also notes a key practical point: the tribunal treated a charge point as capable of being a "premises" for the purposes of the rule, and treated the 1,000 kWh threshold as a monthly cap rather than something that must be applied session-by-session.
Why this matters to normal drivers (even before anything changes)
Even if you never claim VAT back and you do not run a business, VAT matters because it is built into the price you pay at the charger. If a charging operator can legitimately apply 5% VAT instead of 20%, that can reduce the all-in cost of public charging.
It also matters because it makes "home vs public charging" comparisons a bit less skewed. Right now, many drivers look at their app and think public charging is wildly more expensive, when part of that gap is simply tax treatment rather than energy cost.
Important caveats (so you do not assume too much)
- This was a tribunal decision, not a Budget announcement. HMRC may appeal, and guidance can take time to catch up.
- It is not automatic for every charger. The decision discusses specific facts and a particular charging model, and there may be edge cases around who the "customer" is (for example, direct app users vs third-party roaming arrangements).
- You may not see price changes straight away. Operators need to decide how to treat VAT, how to handle any monitoring requirements, and whether to pass savings on.
So, treat this as "a meaningful sign that the 5% rate may be correct in some scenarios", not "all public charging is now 5%".
The practical move: start tracking your charging costs like an accountant (lightly)
If you care about cost-per-mile, expenses, or just not being surprised at the end of the month, the best thing you can do is improve your record keeping slightly.
1) Keep the receipt (or invoice) for public charging
Most public charging apps will let you download an invoice, email a receipt, or show a transaction record. Save it somewhere consistent. If you later need to evidence a cost (or check whether VAT was charged at 20% or 5%), you will be glad you did.
2) Record where the energy came from (home vs public)
You do not need to log every kWh, but you should be able to answer the basic question: were your miles powered mostly by home charging or public charging?
That one data point helps you:
- understand your real cost per mile (home and public pricing can be very different),
- keep expense claims clean if you are reimbursed under a policy,
- spot when a change in routine (new commute, more motorway trips) pushes you towards higher-cost charging.
3) For business mileage, keep your journeys tidy and defensible
If you claim business mileage, your mileage log should be boring in the best way: date, start and end, purpose, miles. If you are ever asked "how did you get that number?", you can show it without stress.
This is exactly where a mileage tracker is useful. It is easier to keep clean records continuously than to reconstruct them at the end of the tax year.
4) If you run a small business, do not mix up "VAT on charging" with "claiming VAT back"
Whether you can reclaim VAT is a separate question that depends on your VAT registration, how the vehicle is used, the evidence you hold, and the rules for road fuel and mixed-use. The tribunal decision is about the rate that might apply, not automatically about your entitlement to reclaim.
If you are VAT registered and public charging is a meaningful cost line, this is a good moment to speak to your accountant about how you capture evidence and how you split business vs personal usage.
How big could the difference be in pounds and pence?
VAT is not the whole cost, but it is visible at the margins. As a rough illustration:
- If a charger's pre-VAT price is 60p/kWh, then at 20% VAT the customer pays 72p/kWh.
- At 5% VAT, that becomes 63p/kWh.
That is a meaningful shift if you rely on public charging regularly, and it can change the way you calculate your cost per mile. Over a month of work travel or frequent long trips, it adds up.
So, what should you do next?
- Do not assume every public charger will suddenly be cheaper. Watch for operator updates.
- Keep your receipts. Especially if you claim expenses or you are VAT registered.
- Track your miles and your charging type. Home vs public is the key split.
- Revisit your cost-per-mile numbers. If VAT treatment shifts, your "true" running cost can change without you driving any differently.
If you are already logging journeys, you are most of the way there. The goal is not perfect data, it is consistent data that makes your running costs predictable and your claims easy.
Sources
- TransportXtra (Local Transport Today): Tax tribunal rules EV public charging VAT rate should be 5%
- VATupdate: Tribunal rules EV charging points qualify for reduced 5% VAT rate
- Apex Accountants: Public EV Charging VAT Rate in the UK, tribunal says 5% should apply
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