Drivers have been warned they will end up paying millions in tax charges this year with experts issuing urgent calls for Government support.
The warning follows reports of growing disparity between electric vehicle home charging points and public chargers which see drivers pay extortionate amounts in VAT.
Data shows that drivers will be forced to pay an extra £85million just to charge their cars through public points this year because of a 20 per cent VAT rate, while those with home chargers pay just five per cent VAT.
However, Zapmap data has estimated that VAT contributions will not only increase this year but will rise to a whopping £315million by 2030 as more drivers resort to switching to electric vehicles.
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Drivers are estimated to spend £315million on public charging VAT costs by 2030
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The VAT increases will align with the UK’s Zero Emission Vehicle mandate which requires at least 28 per cent of new car sales to be electric by the end of the year, before rising to 80 per cent by 2030.
Eurig Druce, UK group managing director of Stellantis, told The Guardian: "The path to electric has been set. But there is a real risk of creating a two-tier motoring system where those with a driveway pay less to get around than those without. That can’t be right."
The 20 per cent VAT charge for drivers has become a growing issue for drivers with Vicky Read, chief executive of ChargeUK, warning that reforms are needed to help charge point operators offer public charging that is "as affordable as possible" but the Government also needs to play its part.
Last year, former Transport Secretary Louise Haigh addressed the VAT pricing gap crisis during a Transport Committee meeting.
She told MPs that the Department for Transport was looking at ways to provide more transparency across pricing and oversee the "massive differentials". She said: "The access to charging is obviously one of the biggest barriers, at least in perception, if not in reality, for people making the transition to electric vehicles."
Meanwhile, former Top Gear host Quentin Willson, who founded the campaign FairCharge recently wrote to MPs demanding action.
He explained that reducing the VAT burden on public charging "has become an obvious and very necessary part of this country’s progress towards electrification".
Last year, the Exemption from Value Added Tax (Public Electric Vehicle Charging Points) Bill was presented to Parliament by Conservative MP for Christchurch, Christopher Chope.
He told MPs that the Government is expecting drivers to make the switch to EVs without offering a solution for those without the ability to charge at home which can cause "double jeopardy".
Delvin Lane, chief executive at InstaVolt, said that any VAT cuts would result in cheaper charging prices for drivers in a bid to encourage more to move away from petrol and diesel.
He added: "This small change would bring fairness to those without home chargers, encourage more drivers to switch and support price parity between home and public charging. It’s surprising that there has been no movement on this."
A Treasury spokesperson said: "The shift to electric vehicles is crucial for decarbonising the transport sector and tackling climate change and will support growth and productivity across the UK.
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Drivers have called for public EV chargers to have VAT reduced to five per cent
PA"Our balanced approach ensures fiscal stability while continuing to provide incentives through the tax system such as freezing vehicle excise duty first-year rates for EVs to encourage the transition to electric and zero emission vehicles."
