Andy Burnham introduces new £1.98 driveway rule – starts in October
Drivers across the UK are facing a change to the cost of charging electric vehicles at home, with a new VAT measure taking effect on October 1, 2026. The initiative, presented as a way to ease pressure on household finances, is expected to reduce the cost of domestic electricity for eligible households, including motorists who charge their electric cars on their driveways.
The policy could make a measurable difference to electric vehicle owners who rely on home charging, although the savings will depend on their electricity tariff, vehicle efficiency and annual mileage. For drivers without access to off-street parking, however, the change raises a different concern: the growing gap between the cost of charging at home and using public charging points.
The headline figure of £1.98 reflects an illustrative annual mileage calculation in the supplied report, rather than a new fee motorists must pay to use their driveways. The example compares the cost of running an electric car before and after the reported VAT reduction.
Under the figures cited by LeaseElectric, a Volkswagen ID.3 with a 79kWh battery charged using EDF Energy’s Go Electric with Pod Point tariff would see its estimated electricity cost fall from 1.97p to 1.89p per mile.
For a driver covering 10,000 miles, that difference translates into an estimated annual charging cost of approximately £189, compared with £198 previously. The saving is around £9 over the year, assuming the same mileage and charging tariff.
Although the reduction may appear modest, the Government’s wider argument is that lowering domestic electricity costs could offer support to households at a time when many are scrutinising every regular expense.
The measure also carries political significance. With the transition to electric vehicles continuing to reshape the motoring market, the affordability of charging has become an important question for drivers deciding whether to switch away from petrol and diesel cars.
What changes from October 1?
The supplied report states that the new measure reduces VAT on domestic electricity charging from 5% to zero from October 1, 2026.
If applied as described, the reduction would lower the tax component of eligible domestic electricity costs. Electric vehicle owners who charge at home could therefore benefit alongside other households using electricity for everyday needs.
Andy Burnham is introducing a new rule. (Image: Getty)
The precise benefit for any individual motorist will depend on how much electricity they consume and the price charged under their energy tariff. A driver who charges frequently and covers substantial distances may see a different saving from someone who uses an electric car only for occasional journeys.
It is also important to distinguish the reported tax change from a universal reduction in every electricity bill. The amount households pay depends on their supplier, tariff, standing charges and consumption. A change to VAT would affect the relevant taxable amount, but it would not guarantee that every household’s total bill falls by the same percentage.
The distinction matters because electricity costs are only one part of household expenditure. Mortgage or rent payments, food, insurance, transport and other bills continue to affect how much money families have available at the end of each month.
For motorists, the policy is most relevant when comparing the cost of home charging with other ways of powering a vehicle.
Unlike petrol and diesel drivers, electric vehicle owners can often charge their cars overnight, when some specialist tariffs offer lower electricity prices. Combining an appropriate tariff with the reported VAT reduction could make home charging particularly attractive to people who have suitable parking and charging equipment.
However, not every household has that option. Residents of flats, terraced homes without driveways and properties with limited off-street parking may have to depend on public charging infrastructure, where prices are determined by different commercial arrangements.
That difference is at the heart of the debate over whether the change will make electric motoring more affordable for everyone or primarily benefit households already equipped to charge at home.
How much could electric car owners save?
The figures in the original report provide an illustration of how a small change in the cost per mile can accumulate over a year.
For a Volkswagen ID.3 charged under the specified EDF tariff, the estimated rate falls from 1.97p to 1.89p per mile.
<box border radius=”lg” padding={4} gap={3}> <text color=”secondary” size=”sm”>Illustrative charging costs for 10,000 miles</text> <row align=”center” justify=”between”> <text>Before the reported change</text> <title size=”lg” color=”secondary”>£198</title> </row> <box background=”surface-tertiary” radius=”md” height=”10px” clip> <box background=”#8A8A8A” height=”10px” width=”100%” radius=”md” /> </box> <row align=”center” justify=”between”> <text>After the reported change</text> <title size=”lg”>£189</title> </row> <box background=”surface-tertiary” radius=”md” height=”10px” clip> <box background=”#168568″ height=”10px” width=”95.45%” radius=”md” /> </box> <divider color=”subtle” /> <row align=”center” justify=”between”> **Estimated annual saving** <title size=”xl”>£9</title> </row> <text color=”secondary” size=”xs”>Figures are illustrative and based on the supplied report’s per-mile estimates. Actual costs depend on the vehicle, tariff, charging losses and driving conditions.</text> </box>
For a motorist covering 10,000 miles a year, the difference works out at approximately £9. It is a useful saving, but it should not be mistaken for a reduction of £9 every month or a £198 charge introduced by the Government.
The figures also demonstrate why motorists should examine the underlying tariff rather than focus solely on the headline policy. A favourable electricity rate can have a greater effect on annual charging costs than a relatively small tax adjustment.
LeaseElectric also cited a Good Energy EV tariff under which the estimated cost of running the same vehicle would fall from 1.54p to 1.47p per mile.
At 10,000 miles, those figures would equate to a reduction from approximately £154 to £147, a saving of around £7 a year.
The examples are not guaranteed prices for every customer. Electricity rates can change, and the actual cost of charging depends on the proportion of journeys powered at home, the energy consumed per mile and the conditions under which the vehicle is driven.
The initiative aims to help EV owners. (Image: Getty)
For households comparing electric and conventional vehicles, the full calculation should also include purchase or leasing costs, insurance, servicing, depreciation and any applicable vehicle taxes.
Drivers without driveways risk being left behind
The policy’s biggest drawback may be the difference between motorists who can charge at home and those who depend on public infrastructure.
A driver with a private driveway can install a home charger, select an appropriate electricity tariff and charge overnight. Someone living in a flat or a terraced house without off-street parking may have no comparable option.
These motorists may need to use chargers in public car parks, supermarket facilities, roadside bays or dedicated charging hubs. Prices vary between operators and locations, and drivers may also need to pay parking charges or travel out of their way to find an available charging point.
HMRC’s published guidance says the standard rate of VAT continues to apply to electricity supplied at public EV charging points under its current policy. That means public charging does not automatically receive the same tax treatment as qualifying domestic electricity. <Cite refs={[“turn515427search7″,”turn515427search3”]}/>
The result is a potential divide between households with the space and resources to install home charging equipment and those without them.
The distinction could be particularly significant for people on lower incomes. Homeowners with driveways may be able to combine a home charger with a cheaper overnight tariff, while renters and residents of flats may have less control over their charging arrangements.
Installing a private charger can also involve an upfront expense. Although the ongoing cost of home charging may be lower, not every household can afford the equipment or obtain permission to install it.
For drivers who cannot charge at home, the Government’s tax change may still provide indirect benefits through their domestic electricity bills, but it does not necessarily reduce the price they pay at a public charging point.
That creates a challenge for policymakers seeking to encourage electric vehicle adoption across different types of housing and income groups. If the financial advantages of electric motoring are concentrated among households with private parking, other motorists may find the transition more difficult.
Public charging VAT remains a contentious issue
The difference between domestic and public charging has already been the subject of a wider tax debate.
HMRC’s position is that electricity supplied at public EV charging points is generally subject to the standard VAT rate. The department has also acknowledged legal arguments concerning the circumstances in which supplies of electricity at certain public locations might qualify for reduced VAT treatment. <Cite refs={[“turn515427search7”]}/>
For motorists, the practical issue is straightforward: the price displayed at a public charger can be substantially different from the effective cost of charging at home.
However, VAT is only one factor. Public charging operators must cover equipment installation, maintenance, network connections, land access and other operating costs. Consequently, eliminating or reducing VAT would not necessarily bring public charging prices down to the same level as domestic electricity.
The Government must therefore consider whether further measures are needed to improve affordability for drivers without driveways, while maintaining incentives for investment in public charging infrastructure.
More on-street charging bays, reliable rapid chargers and clearer pricing could help motorists who cannot install private equipment. Local authorities and private operators would also need to consider whether charging facilities are available in the places where people live, work and shop.
Without those improvements, the transition to electric motoring risks becoming less convenient for people who live in densely populated areas or cannot afford a property with a driveway.
A temporary tax cut rather than a permanent guarantee
The new VAT arrangement is temporary. The official Government policy states that the zero rate for qualifying domestic electricity supplies in Great Britain applies from October 1, 2026, until March 31, 2027. <Cite refs={[“turn515427search0″,”turn515427search4”]}/>
That means motorists should not assume that the rate will remain at zero indefinitely. Any extension or replacement would depend on subsequent Government decisions and the relevant legislation.
The policy has been presented as immediate support for households facing pressure on their energy bills during the colder months. The Government has said the electricity VAT reduction will keep the energy price cap around £45 a year lower than it would otherwise have been for a typical household during the initial period. The precise saving depends on consumption and the supplier’s prices. <Cite refs={[“turn515427search2″,”turn515427search6”]}/>
For electric vehicle owners, the effect on charging costs is part of that wider household measure rather than a separate exemption designed exclusively for driveway owners.
This distinction matters because the headline language around a new “driveway rule” could give the impression that the Government has introduced a special motoring charge or a new legal obligation for people with private parking. The measure described in the source is instead a temporary reduction in VAT on qualifying domestic electricity.
Motorists do not need to apply for a separate driveway discount under the measure. Suppliers are expected to apply the relevant VAT treatment to qualifying electricity bills during the designated period. <Cite refs={[“turn515427search2″,”turn515427search6”]}/>
What should EV owners do next?
For drivers who already charge at home, the most useful step is to review their electricity tariff and understand how the temporary VAT change affects their bills.
A specialist EV tariff may offer cheaper electricity during particular overnight hours, but the best option depends on the household’s overall electricity use, charging schedule and the terms offered by the supplier.
Drivers should compare the full tariff rather than looking only at a headline rate. Standing charges, daytime prices, contract conditions and the cost of electricity used by the rest of the household can all affect the final bill.
Those considering an electric vehicle should also calculate the cost of installing a home charger, where necessary, and compare that expense with the likely savings over the period they expect to own the car.
People who rely on public charging should check the prices and availability of nearby charging networks before committing to an EV. A vehicle that is economical to run for a homeowner with a driveway may have a different financial profile for someone who depends entirely on public chargers.
The official Government guidance confirms that the temporary zero rate applies to qualifying domestic electricity in England, Scotland and Wales. Northern Ireland retains the reduced 5% VAT rate for qualifying domestic electricity under the published rules, so motorists should not assume the arrangements are identical across the whole UK. <Cite refs={[“turn515427search0″,”turn515427search3”]}/>
Political pressure over the cost of going electric
For Andy Burnham’s Government, the measure offers an opportunity to demonstrate that action on energy bills can provide practical help to households. Lowering the tax on qualifying domestic electricity may also strengthen the financial case for charging electric vehicles at home.
But the policy’s impact should be judged against what drivers actually save, not simply the announcement’s headline.
The supplied examples suggest that the difference in per-mile charging costs can amount to only a few pounds over 10,000 miles under the tariffs cited. Other households may save more or less, depending on their usage and electricity prices. The separate claim that some high-mileage motorists could save up to £40 annually should likewise be treated as an estimate rather than a guaranteed payment.
The larger political question is whether a temporary tax cut is enough to make motoring more affordable in the long term. Energy prices, public charging costs, vehicle prices and the availability of suitable charging facilities will continue to shape drivers’ decisions.
The Government will also face questions about fairness if people with private parking receive a greater direct benefit from lower-cost home charging than those living in flats or properties without driveways.
For now, the change that began on October 1 is a reduction in VAT on qualifying domestic electricity, not a new fee for owning or using a driveway. It can lower eligible household electricity costs and may make home charging cheaper, but the actual saving will depend on individual circumstances.
The headline £1.98 figure is best understood as an illustration of annual charging costs before the change, compared with approximately £1.89 per 1,000 miles afterwards under the example tariff. For a driver covering 10,000 miles, the figures cited in the source indicate a reduction from around £198 to £189.
That is a saving, but not a windfall. And for drivers who cannot charge at home, the key question remains whether the Government will do more to make public charging affordable, accessible and reliable.
As Britain continues its shift towards electric vehicles, the success of the policy will depend not only on helping households with driveways, but also on ensuring that the benefits of lower-emission motoring are accessible to drivers across the country.