Andy Burnham introduces new 2p per mile driveway rule – starts in October
Prime Minister Andy Burnham’s decision to remove VAT from domestic electricity has brought fresh attention to the cost of electric vehicle ownership, with some British motorists potentially able to charge their cars for as little as 2p per mile.
The change, which the original report says came into effect on October 1, reduces VAT on domestic electricity from 5% to zero, offering financial relief to households and creating additional savings for drivers who charge electric vehicles at home.
For motorists with access to private driveways, garages or other suitable off-street parking spaces, the policy could make electric driving significantly cheaper when combined with specialist overnight electricity tariffs.
Analysis from costpermile.co.uk suggests that an efficient family electric hatchback or SUV could cost approximately £200 a year in electricity to cover 10,000 miles when charged at a favourable smart tariff.
However, the announcement has also intensified concerns about the financial gap between drivers who can charge at home and those who rely on public charging stations.
While households using domestic electricity benefit from the reported VAT reduction, motorists using public charging facilities continue to face the standard 20% VAT rate.
The difference has prompted industry representatives to call for further government action, warning that the benefits of cheaper electric motoring should not depend on whether someone owns a driveway.
October electricity VAT cut brings new savings
The policy outlined in the original report centres on the removal of VAT from domestic electricity supplies.
Previously, household electricity was subject to a reduced VAT rate of 5%.
Under Burnham’s reported October change, that rate was reduced to zero.
For households, the measure lowers the tax component of electricity bills.
For electric vehicle owners, it also reduces the cost of electricity purchased through eligible domestic supplies.
However, the change should not be confused with a separate regulation requiring homeowners to modify their driveways.
The phrase “2p per mile driveway rule” describes a potential charging cost rather than a legal obligation affecting parking spaces.
Motorists are not automatically entitled to a fixed electricity price of 2p per mile.
Andy Burnham has updated electric VAT charges this October (Image: Getty)
Actual costs depend on the electricity tariff, vehicle efficiency and charging arrangements.
The policy creates an opportunity for savings, but the amount varies from one household to another.
Why some drivers could pay only 2p per mile
The cheapest charging costs identified in the report are associated with smart off-peak electricity tariffs.
These tariffs offer lower prices during selected periods, often overnight.
Electric vehicle owners who can leave their cars plugged in during those hours may be able to take advantage of discounted electricity.
According to costpermile.co.uk, some suitable tariffs could provide electricity at approximately 7p per kilowatt-hour.
For a vehicle achieving 3.5 miles per kWh, that equates to around 2p per mile.
The calculation is straightforward.
At 7p per kWh, each unit of electricity costs seven pence.
If that unit powers a vehicle for 3.5 miles, the electricity cost per mile is approximately two pence.
However, this estimate assumes the vehicle achieves the stated efficiency and that the electricity is purchased at the discounted rate.
Charging losses and variations in real-world driving conditions can increase actual costs.
Annual charging costs could fall to around £200
The financial advantage becomes particularly striking when calculated over a full year.
The analysis uses an illustrative annual distance of 10,000 miles.
At an average efficiency of 3.5 miles per kWh, a vehicle would require approximately 2,857 kWh to cover that distance before accounting for charging losses.
If every unit cost 7p, the theoretical electricity bill would be approximately £200.
That is a relatively small annual energy cost for a vehicle covering substantial mileage.
However, the figure does not represent the total cost of owning or operating an electric car.
It excludes insurance, servicing, tyres, repairs, depreciation and the initial purchase price.
It also excludes any additional electricity consumed during the charging process.
The estimate is therefore best understood as a potential annual electricity cost under favourable conditions.
Motorists should not assume that every electric vehicle will achieve the same result.
Standard home tariffs also benefit from VAT reduction
Drivers who do not use a specialist overnight tariff may still benefit from the reported tax change.
According to the original report, motorists charging on a standard domestic electricity tariff could pay approximately 24p per kWh.
For a vehicle travelling 3.5 miles per kWh, that works out at around 6.9p per mile.
Over 10,000 miles, the estimated annual electricity cost would be approximately £686, rounded to £690.
That is substantially higher than the £200 estimate for the cheapest smart tariff.
However, it illustrates that home charging can offer different levels of affordability depending on the household’s electricity contract.
The removal of VAT affects the tax component of the price.
It does not eliminate the difference between standard and discounted electricity tariffs.
This distinction is particularly important for motorists considering whether to switch to a new energy deal.
Smart charging becomes increasingly attractive
Smart charging technology allows some electric vehicle owners to schedule charging sessions during periods when electricity is cheaper.
For many households, overnight charging is convenient because the vehicle is parked for several hours.
Instead of charging immediately after arriving home, the system can delay the process until the discounted period begins.
Some arrangements involve compatible vehicles, chargers or electricity tariffs.
The potential savings can be significant when compared with standard domestic rates.
However, not every motorist will find smart charging suitable.
Driveway VAT fees were cut from 5% to 0% this October (Image: Getty)
Drivers who need to recharge at unpredictable times may struggle to use the cheapest periods consistently.
Some tariffs may also have higher electricity prices outside their discounted windows.
Households should therefore compare the complete tariff structure rather than focusing only on the advertised overnight rate.
The lowest charging price is useful only if it fits the driver’s routine.
Polestar UK welcomes cheaper electricity
Matt Galvin, Managing Director at Polestar UK, welcomed the reported removal of VAT from domestic electricity.
He argued that cheaper electricity could make electric vehicle ownership more affordable for British households.
Galvin also linked the measure to wider cost-of-living pressures.
Electricity prices affect household budgets directly, and reducing their tax component can provide relief beyond motoring.
For electric vehicle manufacturers, lower charging costs may strengthen the appeal of switching from petrol or diesel.
However, Galvin also made clear that the policy should not be regarded as the final step.
He called for further measures to reduce the cost of public charging.
His comments reflect a growing industry argument that electric vehicle affordability should be considered across the entire charging network.
Public charging remains subject to 20% VAT
One of the most controversial features of the reported policy is that public charging does not receive the same tax reduction.
Drivers using domestic electricity benefit from a zero VAT rate under the change described in the report.
Motorists using public charging facilities continue to pay the standard 20% VAT rate.
This creates a significant difference between charging at home and charging elsewhere.
The disparity is particularly important for drivers who do not have access to private parking.
People living in flats, rented accommodation or terraced houses may be unable to install a conventional home charger.
As a result, they may depend on public charging networks for most or all of their electricity.
Industry representatives argue that these motorists should not face a higher tax burden simply because of their housing circumstances.
However, VAT is only one factor affecting public charging prices.
Retail park charging can cost far more
The original report cites an average public charging price of approximately 52p per kWh at retail parks and supermarkets.
That is considerably higher than the 7p per kWh example for smart home charging.
At an efficiency of 3.5 miles per kWh, 52p per kWh works out at approximately 14.9p per mile.
The source article also refers to a figure of 12.6p per mile, but that would correspond to a lower electricity price of approximately 44p per kWh at the same vehicle efficiency.
For a consistent comparison, the 52p figure produces an estimated annual electricity bill of approximately £1,486 over 10,000 miles, excluding charging losses.
That compares with approximately £200 for the cheapest home charging example.
The difference demonstrates how strongly charging location can influence running costs.
However, public charging prices vary by operator, location, charger speed and payment arrangement.
The quoted figures should not be interpreted as universal prices across every charging network.
The driveway divide becomes a major political issue
The term “driveway divide” describes the difference in electric vehicle charging costs between motorists with access to home charging and those without it.
Drivers who can park on their own property may be able to install a charger and access discounted domestic electricity.
Those who cannot may rely on public facilities with higher electricity prices and different tax treatment.
The result is an uneven financial experience.
Two motorists driving similar electric vehicles over the same distance could face substantially different charging bills.
Their housing circumstances, rather than their driving behaviour, may be the main reason.
This has become a significant concern for the electric vehicle industry.
If electric motoring is to become practical for a wider range of households, charging must be accessible as well as affordable.
The October VAT reduction may improve the situation for some drivers while leaving the underlying disparity unresolved.
Households without private parking face barriers
For people living in flats or terraced properties, home charging can be difficult.
Some homes have no dedicated parking spaces.
Others rely on shared parking areas or street parking.
Installing a charger may require permission from a landlord, freeholder or property management company.
Physical constraints can also make installation impractical.
Even where a suitable space exists, the upfront cost of charging equipment may discourage some households.
These challenges mean that not everyone can take advantage of the cheapest domestic electricity tariffs.
The issue is particularly important because electric vehicle adoption cannot depend exclusively on households with garages or driveways.
A charging system intended for widespread use must accommodate different types of housing.
Industry calls for public charging VAT reform
Galvin has urged the Government to extend its approach beyond domestic electricity.
He argues that the higher VAT rate on public charging unfairly disadvantages drivers without off-street parking.
His proposed solution includes removing VAT from public electric vehicle charging.
Such a change could reduce part of the difference between home and public charging prices.
However, it would not necessarily make the two options equally cheap.
Public charging operators face additional costs, including infrastructure installation, maintenance, site rental and commercial electricity arrangements.
Faster chargers may also cost more to operate.
Nevertheless, reducing the tax component could make public charging more affordable.
The question for ministers is whether the fiscal cost of such a change would be justified by the benefits to motorists and electric vehicle adoption.
Charging grants face a March 2027 deadline
Galvin has also called for the extension of charging support grants for households without off-street parking.
According to the original report, five chargepoint grants are due to reach a March 2027 deadline.
The report does not identify each grant or provide detailed eligibility conditions.
However, the broader concern is clear.
Financial assistance can help reduce barriers to installing or accessing charging infrastructure.
If support ends before suitable alternatives are available, some households may find the transition to electric vehicles more difficult.
The industry is therefore pressing the Government to consider how long support should continue.
Any extension would need to balance public expenditure with the objective of making charging more widely accessible.
The original report does not confirm that ministers have agreed to extend the grants.
Could cheaper charging encourage more EV sales?
Running costs are an important factor when motorists choose a new vehicle.
The possibility of paying approximately 2p per mile for electricity may appeal to drivers concerned about fuel expenditure.
For households covering long distances, even modest differences in per-mile costs can accumulate over time.
However, vehicle purchase prices also matter.
Some electric cars may have higher upfront costs than comparable petrol or diesel models.
Insurance, depreciation and financing arrangements can influence the overall cost of ownership.
The availability of charging facilities is another major consideration.
Drivers may be reluctant to switch if they cannot recharge conveniently.
Consequently, lower electricity VAT could improve the financial appeal of electric vehicles without resolving every obstacle to adoption.
Why vehicle efficiency matters
The analysis cited in the report assumes an efficiency of 3.5 miles per kWh.
That is an illustrative figure for a family electric hatchback or SUV.
Actual efficiency can vary considerably.
Vehicle size and weight influence energy consumption.
Driving at higher speeds may also increase electricity use.
Cold weather, heating requirements and other conditions can affect performance.
A more efficient vehicle may travel farther on each kilowatt-hour.
A less efficient model may require more electricity to cover the same distance.
Therefore, the 2p per mile figure should not be treated as a guaranteed result for every electric vehicle.
Motorists should use realistic efficiency figures when calculating their own potential savings.
The difference between VAT savings and tariff savings
The October policy combines two separate issues that are sometimes confused.
The first is the reduction in VAT on domestic electricity.
The second is the availability of cheaper smart charging tariffs.
Removing VAT from 5% to zero reduces the tax element of domestic electricity bills.
However, it does not automatically create a 7p per kWh electricity price.
For example, a VAT-inclusive rate of 25.2p per kWh would fall to 24p if the underlying pre-tax price remained unchanged.
That is a saving of 1.2p per kWh.
The much larger difference between 24p and 7p arises from the electricity tariff itself.
Understanding this distinction is essential when interpreting claims about the new policy.
The Government’s reported VAT decision may reduce costs, but the cheapest charging outcome also requires access to a favourable tariff.
A wider debate about household energy costs
The VAT reduction also has implications beyond electric vehicles.
Domestic electricity is used for lighting, appliances, heating systems and many other household activities.
Reducing the tax rate can therefore benefit households regardless of whether they own an electric car.
However, the cash saving depends on electricity consumption and the tariff paid.
A household using more electricity may receive a larger absolute VAT saving.
For policymakers, this raises questions about the most effective way to reduce energy bills.
Broad tax reductions are relatively straightforward in principle.
Targeted assistance may provide more support to households experiencing particular financial difficulties.
The original report does not explain how the Government evaluated these alternatives.
Nevertheless, the measure has become part of a wider political discussion about living costs and energy affordability.
The challenge for Burnham’s electric vehicle strategy
The reported policy gives Burnham an opportunity to demonstrate action on household energy costs.
Lower domestic electricity taxation may provide relief for families and strengthen the appeal of electric vehicles.
However, the decision also creates pressure to address the higher costs faced by public charging users.
The Government must consider how to support motorists with different housing circumstances.
A strategy focused only on private driveways may leave significant groups facing practical and financial barriers.
Expanding public charging infrastructure, reviewing taxation and supporting installation programmes could all form part of a broader response.
However, the original report does not announce additional measures beyond the domestic VAT reduction.
The question is whether further changes will follow.
What drivers should consider before switching tariffs
For motorists who can charge at home, the reported VAT change provides a reason to review electricity costs.
However, choosing a tariff requires more than comparing a single advertised rate.
Drivers should consider the hours during which discounted electricity is available.
They should also examine the price charged outside those periods.
Standing charges and other contract conditions may influence the overall household bill.
The vehicle’s charging capabilities and the household’s daily routine are relevant as well.
A tariff offering very cheap overnight electricity may be attractive to a driver who regularly leaves a car plugged in for several hours.
It may be less suitable for someone who frequently needs immediate charging.
The cheapest advertised rate does not always produce the lowest total household cost.
Will public charging become more affordable?
The future of public charging prices will depend on several factors.
Competition between charging operators may influence prices.
Infrastructure investment could increase availability.
Changes to electricity costs and commercial arrangements may also affect what motorists pay.
Tax policy remains another important consideration.
Industry representatives are pressing for a reduction in public charging VAT.
However, the original report does not confirm that the Government has accepted those demands.
For now, the reported difference between domestic and public charging remains central to the debate.
Drivers without private parking may continue facing higher costs even as home charging becomes cheaper.
October rule highlights winners and losers
The October VAT change illustrates how a single tax policy can affect different groups in different ways.
Homeowners with suitable charging facilities may benefit from cheaper domestic electricity.
Drivers using smart tariffs may achieve particularly low charging costs.
Those using standard domestic tariffs could also see savings.
However, motorists relying on public charging networks remain exposed to higher prices and the standard VAT rate.
The resulting disparity has become a major issue for electric vehicle manufacturers and charging industry representatives.
They argue that a fair transition requires affordable charging options for households without driveways.
The next test for Britain’s electric vehicle transition
Burnham’s reported decision to remove VAT from domestic electricity has created the potential for substantial savings among electric vehicle owners.
Under favourable conditions, some drivers could pay approximately 2p per mile in electricity costs.
Over 10,000 miles, that would amount to around £200.
For motorists using standard domestic tariffs, the estimated annual cost would be closer to £690.
Those dependent on public charging may face considerably higher bills.
The difference highlights the importance of charging access, tariff selection and vehicle efficiency.
It also demonstrates why the policy has attracted calls for further reform.
Cheaper domestic electricity may encourage more motorists to consider electric vehicles.
However, a successful transition will require solutions for people who cannot charge at home.
For Burnham’s Government, the challenge is ensuring that the benefits of lower-cost electric motoring extend beyond households with private parking.
The October VAT reduction may represent a significant step in the policy described by the original report, but the debate over fair and affordable charging is far from over.
Whether ministers move to address public charging VAT and extend infrastructure support could determine how widely those savings are shared.
For now, the promise of 2p-per-mile electric driving remains an attractive possibility for some motorists — and a reminder of the much higher costs that others may still face.