The Double Tax Trap Heading for EV Drivers Who Can't Charge at Home

Imagine buying an electric car to save money — only to find yourself paying more than petrol drivers by 2028

There's a cruel irony at the heart of Britain's electric vehicle transition. The government wants millions of us to switch to EVs. Ministers talk endlessly about cleaner air, lower running costs, and a greener future. Yet for a significant chunk of the population — those without a driveway, a garage, or any realistic prospect of home charging — the financial landscape is about to get considerably worse.

A detailed analysis reported by the Daily Mail has put a name to what many EV owners have quietly feared: a double tax trap. From 2028, drivers who rely on public charging networks could find themselves hit simultaneously by a proposed pay-per-mile road tax and the full 20% VAT rate applied to public charging. The combination doesn't just nibble at the cost advantage EVs currently enjoy — for some drivers, it could eliminate it entirely.

What's Actually Being Proposed?

Let's be precise about what we're dealing with here, because the detail matters enormously.

First: the pay-per-mile road tax. The government is actively exploring a road pricing scheme to replace Vehicle Excise Duty (VED) as EV adoption grows. The logic is straightforward — fuel duty currently raises around £25 billion a year for the Treasury, and as petrol and diesel cars disappear, that revenue disappears with them. EVs already began paying standard VED rates in April 2025 under changes introduced in the Autumn Statement, but that's widely seen as a stopgap. A more comprehensive pay-per-mile system, potentially charging around 3p per mile for EVs, has been discussed in policy circles and floated in various think-tank reports as the likely long-term solution. The Office for Budget Responsibility has itself flagged the fuel duty black hole as a looming fiscal crisis.

Second: VAT on public charging. This is where the inequality bites hardest. Drivers who charge at home pay 5% VAT on their electricity — the reduced rate. Drivers who use public charge points pay the full 20% VAT. That 15-percentage-point gap has existed for years, and it disproportionately affects people in flats, terraced streets, and rented accommodation — in other words, some of the least wealthy drivers in the country. HMRC has been challenged on this discrepancy before. A legal challenge to bring public charging VAT down to 5% was pursued but ultimately resisted by the Treasury, which has shown little appetite for the estimated £150–£200 million annual revenue loss that equalisation would require.

Stack these two costs together, and you have a structural disadvantage for drivers without off-street parking that will only deepen as the EV transition accelerates.

Why This Matters Beyond the Headline

The people most exposed to this double burden are not, by and large, wealthy early adopters with home chargers and solar panels. They are urban renters, flat dwellers in older housing stock, and residents of terraced streets where kerbside charging infrastructure remains years away from adequate coverage.

According to government data, approximately 40% of UK households lack access to off-street parking. In major cities, that figure is considerably higher — in inner London, it can exceed 60%. These are precisely the communities the government claims it wants to bring into the EV transition. They are also, not coincidentally, communities where public transport alternatives are more available — but for those who need a car, the cost equation is becoming punishing.

Consider the numbers in practical terms. A driver covering 10,000 miles a year at 3p per mile under a road pricing scheme would pay £300 annually in mileage tax. Add the VAT premium on public charging — which, depending on tariff and usage, can add £200–£400 per year compared to home charging costs — and you're looking at an additional burden of £500–£700 per year versus a driver with a driveway. That's before insurance, tyres, or any other running cost.

For context, the average petrol car driver pays fuel duty embedded in pump prices, but they don't face a structural penalty simply because of where they live.

The Legal Angle: What the Law Currently Says

The VAT disparity is not a grey area — it is an explicit feature of UK tax law as it stands. Under the Value Added Tax Act 1994 and subsequent Treasury regulations, domestic electricity attracts the reduced 5% rate. Public EV charging, however, is classified differently: because it is supplied commercially rather than for domestic use, it falls under the standard 20% VAT rate.

Attempts to challenge this have been made. In 2023, HMRC confirmed it would appeal a First-Tier Tribunal ruling that had found in favour of a lower VAT rate for certain EV charging scenarios. The government's position has been consistent: public charging is a commercial transaction, and the reduced rate does not apply.

There is, theoretically, a route through the Consumer Rights Act 2015 and broader consumer protection frameworks if charging operators were found to be misleading customers about total costs — but that's a stretch, and no credible legal challenge on those grounds has gained traction.

On road pricing, the legal framework doesn't yet exist. Any pay-per-mile scheme would require primary legislation — a new Act of Parliament — and would almost certainly face judicial review challenges around proportionality and data privacy, given that mileage tracking inherently involves monitoring vehicle movements. The Data Protection Act 2018 and UK GDPR would both be engaged, and civil liberties groups have already signalled opposition to any scheme requiring continuous GPS tracking.

What Drivers Should Know Right Now

If you're currently an EV driver relying on public charging, or considering becoming one, here's what you should be doing:

• Check your electricity tariff options. If you have any possibility of installing a home charger — even a shared arrangement in a block of flats — it is worth pursuing. Some local authorities have grant schemes, and the OZEV (Office for Zero Emission Vehicles) Electric Vehicle Homecharge Scheme has been replaced by the EV chargepoint grant, which covers up to 75% of installation costs for eligible properties including flats.
• Monitor kerbside charging rollout in your area. The government has committed to expanding on-street charging, and many councils are installing lamp-post chargers and dedicated kerbside units. These typically offer cheaper rates than rapid chargers at motorway services or retail parks.
• Understand the true cost of public charging. Rapid chargers can cost 70–85p per kWh at peak times. With 20% VAT baked in, you're paying a significant premium. Slower destination chargers — at supermarkets, leisure centres, or workplaces — are often cheaper and sometimes free.
• Keep records of your charging costs. If road pricing legislation does arrive, there may be transitional arrangements or exemptions, and having a clear picture of your actual costs will matter for any representations to your MP or consultation responses.
• Engage with consultations. The government has run and will continue to run public consultations on road pricing. Responses from affected communities genuinely influence policy design, particularly on exemptions and thresholds.

Looking Ahead: A Policy Problem With No Easy Answer

The double tax trap is, at its core, a symptom of a transition that has been designed around the assumption of home charging. Government incentive structures, infrastructure investment priorities, and tax policy have all defaulted to a model that works well for homeowners with driveways and works poorly — sometimes very poorly — for everyone else.

The 2030 ban on new petrol and diesel car sales (currently under review, but still government policy) will force millions of drivers into EVs whether the infrastructure is ready or not. If the VAT disparity is not resolved and road pricing is introduced without meaningful exemptions or credits for public charging users, the result will be a two-tier EV market: cheap to run if you own your home, expensive if you don't.

There are solutions available to policymakers. Equalising VAT on public and domestic charging would cost the Treasury money but would remove a glaring unfairness. A road pricing scheme could be designed with a per-mile rate that accounts for charging location, or with a rebate mechanism for verified public charging users. Neither is technically impossible — both require political will.

What seems increasingly clear is that the current trajectory, if left unchanged, will mean that the people who can least afford it will pay the most to drive electric. That's not just bad policy — it's the opposite of what the EV transition was supposed to achieve.

Source: Daily Mail analysis, published June 2025. Additional analysis by Parking Ticket Pal editorial team.