- First-tier Tribunal backs reduced 5 per cent VAT rate.
- Ruling could lower costs for public EV charging users.
- HMRC reviewing decision and considering next steps.
A UK tax tribunal has ruled that electric vehicle charging on the public network should be subject to 5 per cent VAT, not the 20 per cent currently applied by HM Revenues & Customs. The decision could have significant implications for EV drivers, community charging operators and the wider electric vehicle charging market.
The First-tier Tribunal found that, under existing VAT law, the reduced 5 per cent domestic rate applies where less than 1,000 kilowatt hours of electricity per month is supplied to a person at a particular location. That threshold, often referred to as the “de minimis” provision, has traditionally been used for domestic electricity.
Community chargepoint operator Charge My Street successfully challenged HMRC’s position, arguing that most EV drivers would not come close to using 1,000 kWh per month at a single public chargepoint. The company was advised by Deloitte.
Daniel Barlow, tax partner at Deloitte, said the Tribunal concluded that drivers should be charged the 5 per cent reduced rate when charging at public facilities, as quoted in a news report. He pointed to the Tribunal’s interpretation of Note 5(g), Group 1, Schedule 7A of the VAT Act 1994.
A challenge to HMRC’s long-held view
HMRC has maintained since its 2021 briefing that public EV charging should attract the standard 20 per cent VAT rate. In Brief 21/07, the authority stated that the de minimis provision only applies where electricity is supplied on an ongoing basis to a person’s house or building and remains under 1,000 kWh per month.
HMRC argued that public chargepoints, typically located in car parks, petrol stations or on-street bays, do not meet that definition. It also said such supplies are not usually ongoing to one individual where the rate can be calculated.
The Tribunal rejected that interpretation in this case, finding that Charge My Street’s community-based charging model met the criteria for the reduced rate.
Charge My Street, structured as a Community Benefit Society, installs and operates local EV chargepoints funded partly through community shares. Profits are reinvested to expand the network.
Daniel Heery, director at Charge My Street, described the outcome as important for communities relying on affordable neighbourhood charging, as quoted in a news report. He suggested lower VAT improves fairness and supports the shift to cleaner transport.
Dr Will Maden, also a director, reportedly said the decision provides clarity for operators working to expand access to charging as the UK moves towards Net Zero.
Wider implications for EV drivers
The ruling could affect EV drivers across the UK if applied more broadly, potentially reducing the cost of charging at public points. However, it remains unclear whether refunds would be issued or how quickly operators might adjust pricing.
Oliver Jarrett, director in Deloitte’s Litigation Advisory & Settlement Group, wrote on LinkedIn that the judgment was “clear” and a strong rejection of HMRC’s arguments, reportedly said in a post following the ruling. He noted that HMRC could seek permission to appeal.
HMRC said it is considering the decision and its next steps.
For now, the Tribunal’s interpretation raises fresh questions about how public EV charging should be taxed — and whether drivers have been paying more VAT than necessary.
