Andy Burnham new 7p per kWh driveway rule change — started in October

Prime Minister Andy Burnham’s latest changes to domestic electricity taxation have sparked a fresh debate about the cost of electric vehicle ownership, with motorists who can charge their cars at home potentially benefiting from some of the lowest running costs available.

Under the policy described in the original report, VAT on domestic electricity was reduced from 5% to zero from October 1, offering savings to households and providing an additional benefit to drivers who recharge their electric vehicles through their home electricity supply.

Analysis from costpermile.co.uk suggests that motorists using certain smart off-peak electricity tariffs could pay approximately 7p per kilowatt-hour to charge their vehicles.

For an efficient family electric car travelling around 3.5 miles per kWh, that could mean electricity costs of approximately 2p per mile.

Over 10,000 miles, the estimated charging bill would be just £200.

However, the policy has also renewed criticism of what industry representatives describe as Britain’s growing “driveway divide”.

While motorists with access to private home charging can take advantage of cheaper domestic electricity, drivers who depend on public charging infrastructure continue to face substantially higher prices.

The Government’s decision not to extend the same VAT reduction to public charging has raised questions about fairness, particularly for people living in flats, rented accommodation or properties without off-street parking.

The result is a politically sensitive dilemma for Burnham: how can ministers encourage the transition to electric vehicles while ensuring that the financial benefits are not concentrated among households fortunate enough to have their own driveway?

New domestic electricity VAT change takes effect in October

The central policy change outlined in the report is the removal of VAT from domestic electricity supplies.

Previously, domestic electricity was subject to a reduced VAT rate of 5%.

From October 1, the report states that this rate was cut to zero.

For households, the change is intended to reduce the tax component of electricity bills.

For electric vehicle owners, it also affects the cost of charging cars using domestic electricity.

However, the VAT reduction should not be confused with a separate legal requirement affecting driveways.

The policy concerns electricity taxation rather than a new rule requiring homeowners to install chargers or change how they use their parking spaces.

The headline’s reference to a 7p per kWh driveway rule reflects the potential charging price available through certain home tariffs.

It does not mean that every electric vehicle owner is guaranteed electricity at that rate.

Actual charging costs depend on the household’s electricity tariff, charging schedule and vehicle efficiency.

Why some EV drivers could pay just 7p per kWh

The cheapest charging costs are available to motorists using suitable smart off-peak tariffs.

These tariffs typically offer lower electricity prices during selected periods when demand on the electricity network is reduced.

For electric vehicle owners, overnight charging can be particularly convenient.

A car parked at home for several hours may be able to recharge during the cheapest available period.

According to the analysis cited in the report, some motorists could pay approximately 7p per kWh.

At that price, a vehicle achieving 3.5 miles per kWh would cost roughly 2p per mile in electricity.

However, the 7p figure is a tariff-based example rather than a universal national charging rate.

Drivers must check the terms of their electricity contracts.

Some smart tariffs have eligibility requirements or offer lower prices only during specific hours.

Others may have different rates for electricity used outside the discounted charging period.

The financial advantage therefore depends on whether motorists can consistently charge during the cheapest hours.

How much could drivers save over 10,000 miles?

The costpermile.co.uk calculations illustrate how inexpensive home charging can become under favourable conditions.

Consider a family electric hatchback or SUV with an average efficiency of 3.5 miles per kWh.

Travelling 10,000 miles would require approximately 2,857 kWh of electricity before accounting for charging losses.

At 7p per kWh, the theoretical electricity cost would be around £200.

That works out at approximately 2p per mile.

For motorists accustomed to paying substantially more for fuel, such figures may strengthen the financial case for switching to an electric vehicle.

However, the estimate covers electricity consumption rather than the total cost of car ownership.

It does not include vehicle purchase costs, insurance, maintenance, tyres, depreciation or other motoring expenses.

It also excludes any additional electricity consumed through charging losses.

The calculation is therefore best understood as an illustration of potential charging expenditure.

Actual annual costs may be higher or lower depending on driving conditions, vehicle performance and the electricity tariff.

Standard home charging also becomes cheaper

Drivers do not necessarily need a specialist overnight tariff to benefit from the reported VAT reduction.

According to the original report, motorists using a standard domestic electricity tariff could pay approximately 24p per kWh.

For a vehicle travelling 3.5 miles per kWh, that would produce an estimated electricity cost of around 6.9p per mile.

Over 10,000 miles, the annual charging cost would be approximately £686, rounded to around £690.

That remains considerably higher than the £200 estimate associated with the cheapest smart tariff.

However, it may still compare favourably with some other motoring costs.

The figures also show why tariff selection matters.

Electric car owners with a driveway are set to pay less to charge (Image: Getty)

Two drivers using similar electric vehicles could face very different annual electricity bills depending on when and where they charge.

The removal of domestic electricity VAT may provide a benefit across eligible home tariffs, but the size of the saving will vary.

The driveway divide becomes a political problem

The most controversial aspect of the policy is the difference between home charging and public charging.

Drivers with a private driveway or garage can often install a domestic charger and access household electricity rates.

Those without off-street parking may have no realistic option but to use public charging facilities.

That creates a substantial difference in running costs.

According to the figures cited in the report, an on-street charging point may cost approximately 44p per kWh.

Charging at retail parks or supermarkets may cost around 52p per kWh.

Both figures are significantly higher than the cheapest home charging rates.

The disparity raises concerns because access to a driveway is influenced by housing circumstances.

People living in flats, terraced properties or rented homes may find home charging difficult or impossible.

Consequently, motorists who already have access to private parking may receive the greatest financial advantage.

Public charging remains subject to higher VAT

The report states that Burnham’s domestic electricity VAT reduction has not been extended to public charging supplies.

Public charging continues to attract the standard 20% VAT rate.

This difference has become a major source of frustration for parts of the electric vehicle industry.

Campaigners argue that electricity used to charge the same type of vehicle should not face such different tax treatment solely because of where it is purchased.

However, public charging prices are influenced by more than VAT.

Operators must also account for equipment, maintenance, site rental, electricity supply arrangements and other business costs.

Consequently, equalising VAT rates would not necessarily make public charging as cheap as charging at home.

Nevertheless, it could reduce part of the price gap.

The political question is whether the Government should use tax policy to narrow that disparity.

On-street charging could cost more than six times as much

The contrast becomes particularly striking when comparing the cheapest home tariff with on-street charging.

At 7p per kWh, the estimated annual electricity cost for 10,000 miles is around £200.

At 44p per kWh, the same vehicle would require approximately £1,257 worth of electricity for the same distance, excluding charging losses.

That represents a difference of more than £1,000 annually.

The public charging price is more than six times the cheapest example home tariff.

However, this comparison uses a particularly favourable off-peak domestic rate.

Not every household can access or consistently use such a tariff.

A more representative comparison for some drivers may be between standard domestic charging at 24p per kWh and public charging at 44p per kWh.

Even then, the public charging option remains substantially more expensive.

The figures illustrate why access to affordable charging infrastructure is becoming an increasingly important factor in electric vehicle ownership.

Retail park and supermarket chargers can cost even more

According to costpermile.co.uk, charging at retail parks and supermarkets may cost approximately 52p per kWh.

For an electric vehicle achieving 3.5 miles per kWh, that works out at roughly 14.9p per mile.

Over 10,000 miles, the electricity bill would be approximately £1,486.

That is more than seven times the estimated cost of charging exclusively at 7p per kWh.

However, public charging facilities differ considerably.

Prices may depend on charger speed, location, network operator and the type of payment arrangement.

Rapid chargers, which can deliver electricity more quickly, may carry higher prices than slower charging points.

Some operators also offer subscriptions or discounted rates.

Therefore, the figures should be treated as examples rather than guaranteed prices at every location.

Nevertheless, they highlight the financial disadvantage faced by drivers who rely heavily on more expensive public infrastructure.

ChargeUK warns policy could deepen inequality

Shane Brennan, chief executive of ChargeUK, welcomed the reduction in domestic electricity VAT while warning about its unintended consequences.

He argued that lowering household electricity costs was a positive step during a period of financial pressure.

However, he also warned that the policy could widen the gap between motorists who can charge at home and those who cannot.

His concerns reflect a wider industry debate about the fairness of electric vehicle taxation.

If cheaper running costs are one of the main incentives for switching to electric cars, access to those savings matters.

A driver with a private charger may enjoy substantial savings.

Another driver with an otherwise identical vehicle could pay considerably more because of their housing situation.

Industry representatives fear that this disparity may discourage potential buyers who depend on public chargers.

That could complicate efforts to encourage wider electric vehicle adoption.

Could the VAT cut make electric cars more attractive?

For motorists with suitable home charging arrangements, lower electricity costs could improve the appeal of electric vehicles.

Running costs are an important consideration when purchasing a car.

Drivers often compare electricity or fuel expenditure alongside insurance, servicing and the initial purchase price.

The possibility of charging for around 2p per mile may therefore influence some buying decisions.

However, the savings must be considered alongside the cost of the vehicle itself.

Electric cars can vary significantly in purchase price.

Battery size, driving range and charging capability may also affect ownership decisions.

Motorists who drive relatively few miles may find that electricity savings are less significant than for high-mileage drivers.

Others may prioritise convenience and access to reliable charging.

The VAT reduction could strengthen the case for electric vehicles, but it is unlikely to be the only factor determining whether households make the switch.

Drivers without driveways face additional obstacles

The financial difference is only one challenge for motorists without private parking.

Public charging also requires access to suitable locations.

Drivers may need to travel to a charging station, wait for an available space or plan journeys around charging opportunities.

For people with demanding work schedules or caring responsibilities, that can be inconvenient.

Residents of flats and terraced streets may face particular difficulties.

Some properties have no dedicated parking spaces.

Others may have parking arrangements that make installing a domestic charger impractical.

Landlord approval, building management rules and installation costs can create further complications.

These issues are important because a successful transition to electric vehicles requires charging to be practical for a wide range of households.

Lower domestic VAT alone does not address the needs of drivers who cannot access domestic charging.

Could on-street charging offer a solution?

Expanding affordable on-street charging infrastructure is one potential response to the driveway divide.

Charging points installed in residential areas could allow motorists without private parking to recharge closer to home.

Some slower charging systems may be particularly suitable for overnight use.

However, installing and operating these facilities involves practical challenges.

Local authorities must consider street layouts, pedestrian access, parking demand and electrical infrastructure.

Operators must also determine whether charging facilities are financially viable.

The Government could potentially support expansion through funding, regulation or cooperation with local councils.

However, the original report does not announce any specific new programme of this kind.

The broader point is that access to reliable, affordable public charging will remain important if electric vehicles are to become practical for more households.

Does cutting domestic VAT deliver equal benefits?

The policy is not limited to electric vehicle charging.

Because the reported reduction applies to domestic electricity supplies, households may benefit through their wider electricity consumption.

That could provide relief for families facing high energy costs.

However, the financial benefit depends on how much electricity a household uses and the price it pays.

A household consuming more electricity in absolute terms may receive a larger cash saving from the VAT reduction.

Electric vehicle owners who charge frequently at home may therefore receive an additional advantage.

That does not necessarily make the policy ineffective.

Broad reductions in household energy taxation can provide relief across many groups.

However, ministers must consider whether the distribution of benefits aligns with their wider objectives.

The driveway divide illustrates how a general household tax measure can have different consequences for motorists depending on their circumstances.

What the 7p figure does — and does not — mean

The headline reference to 7p per kWh could easily create confusion.

It does not represent a new government-mandated price for charging electric cars.

Nor does it mean every household with a driveway will pay exactly that amount.

The figure comes from an example involving a favourable smart off-peak electricity tariff.

The Government’s reported policy change concerns VAT.

Removing 5% VAT from a domestic electricity bill reduces the tax component, but it does not automatically turn a much higher electricity rate into a 7p tariff.

The underlying energy price remains determined by the applicable tariff and other market or regulatory conditions.

For example, removing 5% VAT from a VAT-inclusive electricity price of 25.2p per kWh would reduce it to 24p, assuming the underlying pre-tax price remains unchanged.

That is a meaningful reduction, but much smaller than the difference between standard and discounted overnight tariffs.

Understanding this distinction is essential when estimating potential savings.

Electricity costs are only part of EV ownership

Although cheap home charging can be attractive, motorists should avoid assessing electric vehicle affordability through electricity prices alone.

Vehicle depreciation can represent a substantial ownership cost.

Insurance premiums may vary depending on the model, driver and location.

Tyres, servicing and repairs also contribute to annual expenditure.

Home charger installation can involve an upfront cost, although some households may already have suitable equipment.

Electric vehicle efficiency is another important factor.

The 3.5 miles per kWh figure used in the report is an illustrative average.

Actual performance may change with speed, weather, driving style and vehicle load.

Cold temperatures can also affect energy consumption.

Therefore, the £200 annual estimate should be viewed as a best-case charging illustration rather than a promise of total motoring expenditure.

Burnham faces pressure over the fairness of charging costs

The reported VAT change presents Burnham with both a political opportunity and a challenge.

Reducing domestic electricity taxation may appeal to households looking for relief from energy bills.

Electric vehicle owners with access to home charging may welcome the additional savings.

However, the policy also exposes an existing inequality between different groups of drivers.

Those who rely on public chargers may question why their electricity remains subject to a higher tax rate.

Industry representatives have warned that the disparity could discourage people from switching to electric cars.

The Government must therefore balance the benefits of household tax relief with the need to support accessible charging infrastructure.

A policy that makes electric vehicles cheaper for some motorists but leaves others facing significantly higher running costs could prove politically contentious.

What happens next for electric vehicle charging?

The future of the charging market will depend on several factors.

Electricity tariffs may change over time.

Public charging networks may expand, while competition between operators could influence prices.

Government decisions about taxation and infrastructure investment may also affect the affordability of electric vehicle ownership.

For motorists, the immediate priority is understanding the actual cost of charging under their own circumstances.

Drivers with access to home charging should compare available tariffs and consider whether overnight charging fits their routines.

Those who depend on public chargers may benefit from comparing operators, locations and pricing arrangements.

However, the wider policy challenge cannot be solved through individual shopping decisions alone.

A charging system intended to support widespread electric vehicle adoption must work for households with different incomes, housing arrangements and travel needs.

October VAT change highlights a growing divide

Burnham’s reported October electricity VAT reduction has created an opportunity for some electric vehicle owners to lower their charging bills.

Under favourable conditions, drivers using smart off-peak tariffs could spend approximately £200 on electricity over 10,000 miles.

Those using standard domestic tariffs may pay around £690.

However, motorists relying on public chargers could face annual electricity costs exceeding £1,200 or even £1,400 at the illustrative rates cited in the report.

That difference demonstrates why the debate extends beyond a simple tax cut.

For homeowners with driveways, electric motoring may become increasingly economical.

For people without access to private charging, the financial benefits may remain much harder to achieve.

The Government’s decision not to extend the VAT reduction to public charging has therefore intensified calls for a fairer approach.

Ultimately, the success of Britain’s electric vehicle transition will depend not only on how cheaply some motorists can charge at home, but also on whether affordable charging becomes accessible to everyone.

The October change may offer welcome savings, but it has also placed the driveway divide firmly back at the centre of the political debate.