Drivers in rural areas pay 15 percent less car tax due to little-known rule

Dozens of drivers in rural areas are paying less car tax than those in the city due to a little-known rule.

Electric car owners topping up at home pay just five percent VAT compared to the 20 percent charge at public bays.

Earlier this year, it was estimated that around 40 percent of households do not have access to off-street parking at home.

Data from ZapMap shows that almost 35 percent of public charging bays are located in London.

Meanwhile, the North East, Wales, East Midlands and the Yorkshire and the Humber each have less than 3,000 plugs, making this a rural vs urban divide as much as a home vs street issue.

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Richard Palmer, spokesperson for Transport and Environment (T&E) said there was a “cost disparity” between charging at home and in public which needed to be solved.

However, he hinted that the benefits of a possible deduction in VAT rates may not even be felt by owners if some action was taken.

Speaking to, Mr Palmer explained: “The thing to remember is that we are still in the early stages of the electric vehicle transition.

“We are still learning about how EV drivers will behave, like how people will charge their vehicles and where. Most people will be able to charge at home, but ultimately there is that disparity of cost between charging at home and charging on the public network. This is an equity issue and it’s vital that it’s addressed.

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“One way of addressing this that has been suggested would be to bring VAT on public charging down to five percent, in line with domestic electricity, but there may be a risk that such a cut wouldn’t be passed on to consumers so other solutions should be explored too.”

But, no change is on the horizon with the Government ruling out slashing VAT costs last year.

They previously remarked there were “no plans” to review the current rates as this would “come at a cost”.

The issue around charging VAT rates was raised by the industry after Rishi Sunak pushed back the planned petrol and diesel car ban to 2035 last month.

Alok Dubey, Regional Director for Western Europe at Monta, said cutting tax rates on charging should be on the Government’s priority list.

He commented: “If the Prime Minister wants to reduce carbon emissions and achieve net-zero targets then he should be considering other methods to incentivise motorists by equalising the VAT rates for charging EVs and encouraging motorists to source greener ways to charge their EVs through renewable energy sources like solar.”

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