Experts call for end to major car tax policy as one group of drivers forced to pay extra VAT

Electric car owners are being forced to pay extra VAT when charging their vehicle in public in a major blow to road users with no off-street parking

There's a stark call from experts for the Government to scrap a new car tax that disproportionately affects a particular group of motorists. Electric vehicle owners who charge their cars in public are being hit with extra VAT, dealing a significant blow to those without off-street parking.

While home-charging attracts just five percent VAT, those relying on street or public parking bays are charged 20 per cent. Previous appeals have been made to align the charging VAT rate at five per cent for all; however, specialists at New Automotive have now urged the Government to start "implementing ways to reduce the rate of VAT" within the next couple of years.

They highlight this unfairness in the recently published 'Vehicle Taxation: The Next 25 Years' study, stressing the challenge of encouraging drivers without home charging facilities to embrace electric vehicles amidst high costs. The study points out the difficulties faced without drops in electricity prices, easing connection fees and standing charges, and without charge point operators delaying their break-even points.

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It reads: "Without a slump in electricity prices, huge easements in connection fees and standing charges, alongside a willingness on the part of charge point operators to push back break-even points, it is difficult to envisage how Government will persuade car owners without access to home charging to pay more and switch when the chief attraction towards EVs for everyone else is to pay less."

Furthermore, if the policy remains unchanged, NewAutomotive forecasts a potential £6.7 billion annual revenue boost for the Treasury by 2050, reports the Express.

Slashing VAT fees from 20 per cent to five percent would see revenues plummet to just £2.1 billion, resulting in a loss of a whopping £4.6 billion.

However, experts caution that reducing VAT rates isn't the sole solution to the contentious charge.

NewAutomotive suggested: "If however this is an act of forbearance too far, there is an alternative, which is to fund a uniform rate of five percent VAT through increases in Vehicle Excise Duty, pooling the costs across all motorists."

At the start of the year, the Government indicated it had no intention to review the VAT rates on electric car charging.

They clarified: "VAT is a broad-based tax on consumption and the 20 percent standard rate applies to most goods and services. Whilst there are exceptions to the standard rate, these have always been limited by both legal and fiscal considerations."

"Expanding the VAT relief already available would impose additional pressure on the public finances to which VAT makes a significant contribution."