AA rues missed opportunity to equalise VAT on EV charging

The AA has welcomed Chancellor Jeremy Hunt’s decision not to increase fuel duty for a further 12 months, even if the benefit has halved from £100 in 2022 to £50 now. But the organisation has criticised the lack of action on VAT on EV charging.

“Not equalising the VAT on public charging of EVs with domestic charging is a missed opportunity to encourage more car owners to switch to an EV and contribute towards the UK goal of Net Zero,” said Jack Cousens (pictured), the AA’s head of roads policy.

The AA said higher motoring costs, including fuel, maintenance and insurance, are generating substantially higher VAT returns for the Treasury. Petrol, now at 145p a litre, compared to the pre-pandemic average of 123.2p (2017-2019), now includes 3.7p more in VAT. From a typical 55-litre fuel tank, the VAT haul is up by more than £2.

Road fuel prices are currently at levels unheard of before the pandemic even with the 5p fuel duty cut (6p with VAT) in March 2022. More people have been forced into their cars by unreliable trains, reduced bus services and higher housing costs sending them further away to cheaper areas. Councils are ramping up parking costs, even sometimes taxing city workers with a Workplace Parking Levy.

“Even with the intense pressure to balance the UK’s books, now is not the time to rev up motoring costs for workers and families – and stoke inflation,” Cousens said. “The AA therefore welcomes the 12 month freeze in fuel duty, despite the effect being halved from its introduction.”