Electric car drivers backed by £100m to cut charging costs as Labour pledges further action

This follows the publication of the Government’s Cost of Charging review, which acknowledged the gap in costs for home and public charging.

When charging in public, drivers are faced with a 20 per cent VAT rate, compared to zero when charging at home, after intervention by the Government at the start of October.

Chancellor John Healey announced the removal of VAT from household electricity bills, which he extended today until July 2027.

Estimates suggested that this would help the average household save £45 a year, further delivering savings for electric car owners.

In addition to this, the Government said it would take immediate steps to “establish a taskforce to explore allowing drivers to use their domestic electricity tariff at local, lower-powered public charge points”.

Labour acknowledged that this would be a “complex proposal”, prompting a £100million investment over the next two years to reduce costs at lower-powered public chargers.

This will come into effect from Spring 2027, and is expected to save the average non-home-charging EV driver who uses on-street chargers around £150 per year.

Budget documents stated that the Department for Transport will set out next steps in due course.

The Cost of Charging review, written by Philip New, called for time-limited financial support to reduce charging prices for drivers.

It also demanded that the Government “address the tension between the UK Government’s EV priorities and the electricity network charging and policy levy regimes in Great Britain”.

Around 40 per cent of drivers across the UK do not have access to off-street parking, forcing them to rely on public charging if they have an EV.

Speaking previously to GB News, Adam Wood, managing director of Renault UK, acknowledged that the Government faced a “delicate balancing act” when considering VAT changes.

He added: “What’s clear is, if we’re to succeed in convincing more and more people to go electric, then those without access to home charging are dependent on the public network; they need a solution for lower-cost charging.

“In those difficult choices, a clear differential between home and public charging is now 20 per cent. That’s something that the Government should consider when looking at cost.”

The Government recently announced that it would be removing red tape for drivers looking to install a charger using a cross-pavement solution.

Referencing the move in the Budget, Chancellor John Healey reaffirmed that drivers could save up to £300 when installing EV chargers at home.

Motorists will no longer be required to apply for planning permission to install cross-pavement chargers.

Savings include up to £300 in installation costs, while also allowing drivers to use EV-friendly tariffs, meaning they can charge for as little as 2p per mile.