Chancellor urged to cut in VAT on public charging as EV drivers set to pay car tax for the first time – AA EV Recharge Report

The AA is urging the Chancellor to cut VAT on public charging from 20% to 5% at the Spring Statement to help boost EV uptake. The AA EV Recharge Report for February 2025 shows that while prices were frozen across the board, EV drivers could save £4.80 per charge at ultra-rapid chargers if VAT was slashed².

Meanwhile, pump prices edged ever closer to 140.00 pence per litre further driving up the cost of combustion motoring. As a result of the increase cost of fuel, off-peak ultra-rapid charging was a full 2 pence per mile cheaper to use compared to petrol.

AA EV Recharge Report, February 2025. Flat rates;

AA EV Recharge Report, February 2025. Peak and Off-Peak rates;

EV drivers to pay car tax from April

Following the publication of The AA's latest EV report³, prospective EV owners told The AA that incentives to help them buy and own a vehicle. However, the introduction of car tax (VED) for electric vehicles from 1 April 2025 could hamper owners of new and used EVs.

For the first time in history, VED will be retrospectively applied to EVs that were registered before the introduction of rates. Any EV that was registered before 1 April will now be asked to pay the standard rate tax, currently £195 a year⁴.  However, savvy EV owners have been taxing their cars early at the existing annual cost of £0 to defer paying until March 2026. On top of the standard rate, any EV registered on or after 1 April 2025 with a list price in excess of £40,000 (the price of the vehicle including any options) will also be liable to pay the expensive car supplement rate of an extra £410 a year for five years after the car's first 12 months on the road.

While The AA believes all vehicles should pay VED, electric vehicle tax should be set at a discounted rate to incentivise their purchase.

Jack Cousens, head of roads policy for The AA, said; “The Chancellor has the opportunity to help the transition to electric cars, by making some positive fiscal choices on Wednesday.

“Cutting VAT to match the domestic rate of 5% will help households without dedicated off-street parking avoid the so called ‘pavement tax'. As well as saving drivers nearly £5 a charge, it would encourage those changing their car to opt for one with a plug.

“As most private car buyers opt to buy a used car, the introduction of VED at the full rate from 1 April could have a negative impact on the future of EV ownership. Drivers tell us that incentives are still required at this early stage of adoption.

“While all should pay vehicle tax, a discounted rate for EVs would make buyers take notice before spending their hard-earned cash.”

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NOTES TO EDITORS

1. Average prices are the PAYG options without connection fee as at 28 February 2025. Subscriptions are available for all charge point speeds which can unlock a cheaper p/kWh, however rates vary across provider.

Calculations based on adding 80% to a Vauxhall e-Corsa, 50kW, with a WLTP range of 221 miles. Adding 80% range equates to 178 miles of range. Vauxhall e-Corsa specifications here: Corsa_MY25_PSG_24_February_2025_Library.pdf

Calculations based on Vauxhall Corsa 1.2L (100PS) Petrol with a 40 litre tank. 80% refuel = 32 litres.

Petrol: 32 litres @ 139.80 ppl = £44.74. Combined Low MPG of 52.3 = 366 miles at 12.22 p/mile.

Vauxhall Corsa specifications here: Corsa_MY25_PSG_24_February_2025_Library.pdf

2. Using a benchmark of 78 p/kWh for ultra-rapid flat rate charging, 15.6 p/kWh is VAT. Should VAT be reduced to 5%, the new rate would become 66 p/kWh. Based on cost to add 80% charge to the Vauxhall Corsa EV would be £26.40.

£31.20 - £26.40 = £4.80 saving

3. AA EV Viewpoint| AA

4. Vehicle tax for electric, zero or low emission vehicles - GOV.UK