Electricity VAT Cut
Burnham plans zero VAT on household electricity starting October 2026.
Anonymous
A planned VAT cut will reduce tax on domestic electricity from 5% to 0% starting October 1, 2026, lowering costs for households and drivers who charge electric vehicles at home. LeaseElectric estimates that charging a Volkswagen ID.3 on one cited tariff will cost about 1.89 pence per mile, down from 1.97 pence, while another tariff could bring the cost to 1.47 pence per mile. Savings vary by electricity tariff; one estimate puts the reduction at about £9 over 10,000 miles for the example vehicle. The tax change is expected to apply to existing fixed tariffs for six months, according to one report. Drivers without access to home charging will not receive the same benefit: public rapid charging remains subject to 20% VAT and can cost far more, highlighting a widening cost gap between home and public charging.
Key Points
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On Octopus’s Intelligent Octopus Go tariff, charging at 8p per kWh currently works out to about 1.6p per mile for an EV with a 100kWh battery and 500-mile range; if the VAT saving is passed on, the cost could fall to about 1.52p per mile.
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For public rapid charging, Carwow estimates a 100kWh charge could cost as much as £81, including £16.20 in VAT. That equates to 16.2p per mile for a 500-mile-range EV, or 20p per mile for one with a 400-mile range.
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Andersen EV specialists have said some high-mileage motorists could save up to £40 a year under the revised VAT arrangements.
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The domestic electricity VAT cut is also expected to reduce the cost of running household appliances and electric radiators, not just home EV charging.
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