2 April 2026
Domestic supplies of electricity are reduced-rated for VAT – that is, charged at the 5% rate. Public charging facilities are not only far more expensive per kWh than domestic supplies but HMRC has, for the past 5 years, insisted that they are also to be taxed at 20%. The words insult and injury spring to mind.
A recent tribunal decision has come down firmly on the side of the consumer, ruling that public charging supplies are properly taxed at 5%, not 20%. Three cheers for the tribunal but is HMRC going to mount a fightback?
A note to the VAT legislation declares that certain small (“de minimis”) supplies of fuel and power are always to be treated as domestic supplies (taxed at 5%), even if at first blush they don’t appear to be “domestic”. This is where HMRC made its big mistake (if mistake it has made – an appeal may be on the cards): it took the view that public charging could not be domestic, because it did not take place at the consumer’s premises. However, the legislation, remember, does not require deemed domestic supplies to be actually domestic.
What HMRC said is this: “The de minimis provision does not apply to supplies of electric vehicle charging at charging points in public places. This is because these supplies are made at various places such as car parks, petrol stations and on-street parking, not to a personʼs house or building.”
What the legislation says is this: “… the following supplies are always for domestic use … a supply of electricity to a person at any premises [at a rate of up to 1,000 kWh per month]”.
The tribunal, not surprisingly, decided that “any premises” did not mean “a person’s house or building”, it meant “any premises”. It said: “On its ordinary meaning, as construed in the immediate and overall context in which it is used, premises means any identifiable property, which may include buildings but also a defined public area such as a car park.”
HMRC also argued that supplies had to be “ongoing” in order to qualify for reduced-rating but that was another hallucination about what the legislation says. The tribunal said that the supplies simply had to be less than 1,000 kWh per month, which is thought to cover virtually any electric car user.
So the big question is: what is HMRC going to do about this? It has three options:
- appeal (likely but the arguments are very weak; also see the comments below about changing the law);
- accept the tribunal’s ruling (probably the most sensible option); or
- change the law to “prove” that it was right all along.
The trouble with changing the law is that it will attract unwelcome publicity, for many reasons:
- imposing VAT is never popular;
- taxing “green” behaviour is frowned upon; and, most importantly
- imposing higher tax on the less well-off to the benefit of “the rich” is a complete no-no.
That last comment needs a little more explanation. What HMRC appears to be saying is that those who can afford a large (expensive) enough house to have off-street parking are allowed to benefit from low-cost charging at the 5% VAT rate; those who have to live in small, cheap houses with no off-street parking not only have to go to a public place to charge, with its higher basic cost, but also have to pay VAT at 20% on top. Will HMRC dare to ask the government to change the law to enshrine such a policy?
Thank you to Indicator for sharing this blog with us.
