What is the UK 'pavement tax' and how is it affecting EV drivers?

Higher ‘pavement’ tax on public charging means some drivers are paying more to run their electric cars than others.

It’s no secret that the future of the motor industry is electric.

And for many of us, there’s never been a better time to make the switch from petrol or diesel. Electric cars (EVs) have come a long way since they started going mainstream.

Barriers like range anxiety, concerns around sustainability (EV batteries are notoriously difficult to recycle at end of life) and upfront cost are being actively broken down by manufacturers.

Because EV’s are getting better and better —more powerful, more sophisticated, more attractive. And there’s a wider selection than ever to choose from.

Not only are we getting to know big-name brands like Polestar and BYD with models like the ATTO 3, DOLPHIN and SEAL, but we’re seeing new EV models from our old favourites too.

From Ford bringing back the beloved Capri as an EV, to Peugeot reinventing their existing models with an electric twist, to Volkswagen triumphing with their ID range – it’s clear that Tesla is not the only name in the electric game anymore.

And it helps that there are different ways to get behind the wheel of one than traditional ownership (that’s what we’re here for).

Electric car leasing is a more accessible, achievable and affordable way of getting behind the wheel.

So, with more models to choose from, advancements in tech, and accessible routes into EV driving, the electric revolution should be in full swing.

In theory.

There’s one last big barrier to widespread EV adoption in the UK – and that’s the ‘pavement tax’.

What is the pavement tax? 

On the face of it, it’s a simple issue: we’re talking about VAT on EV chargers.

The UK government classes public charging units as a business, so they come with business VAT rates – about 20%.

But charging at home? You’re only paying 5% VAT. That’s a stonking great difference at work. Anytime you use a public charger, you are literally paying a 15% increase in VAT. It’s such a glaring discrepancy that you could probably see it from space.

But to put it in real terms, The Guardian estimates the difference at £85 million a year.

We don’t need to tell you how enormous that is. But you might be wondering who, exactly, is paying the most towards that staggering sum.

Because this is definitely affecting some EV drivers more than others – the people who don’t have access to home charging. These are likely to be the people who rent, who don’t have access to a private driveway, who may be living in flats etc.

Anyone who is unable to charge their EV at home has to rely on public charging just to run the car, and they pay 15% more for the privilege.

If that sounds like you then we're sorry: you’re probably paying towards that £85 million.

And considering you’re doing your bit for the environment by choosing greener driving, that just doesn’t seem fair. 

Will it put people off EV's? 

We all know that the 2030 ban on the sale of new petrol and diesel cars is looming. No matter how much the UK government has flip-flopped their position on it.

So, if you’re in the market for a new car right now, you’ve probably at least considered an EV. And why wouldn’t you?

The future of electric cars is looking really exciting.

We’re seeing some sensational new makes and models on the market right now, with even more to come.

Tech and battery life are on the up-and-up as batteries get better. Public charging is way more accessible than it was even a few years ago.

Being honest, you probably spot as many EVs on the road as you do potholes these days. (And we know which one we’d rather see on our journey.)

There are a lot of positives when it comes to choosing an electric car.

But you’ve probably thought about what the cons to driving an EV would be too.

Even though batteries are getting better, people still worry about how much range they have. At the top end, you’ve got the Mercedes-Benz EQS, Polestar 3, and VW ID.7 all clocking in at over 400 claimed miles of range.

Which is great if you want to pay for a premium EV.

But if you’re going green on a smaller budget, more compact models like the Dacia Spring, MG4 EV and CUPRA Born may not get you quite as far.

So, you’ll be looking for a public charging station sooner or later.

And availability? It’s still a bit of a postcode lottery, with some places being way better connected than others.

Much like good dim sum, decent public transport, and a thriving theatre district, public charging is something that’s just a little harder to find outside of London.

And while electric leasing is a more affordable way to get your mitts on an EV, incoming VED changes and the new ‘expensive vehicle tax’ are still considerations for your wallet.

If you ask us, the pros definitely outweigh the cons when it comes to going electric. And you’ve probably already considered all this when choosing your next car anyway.

But with headlights shone on the pavement tax issue recently, that 15% difference could be creating a new barrier to EV adoption.

Because even with all the benefits that come with going electric, no one wants to pay more than their fair share to run the same car as their friend, or their neighbour – or even their boss.

It smacks a bit of inequality, to be honest. And a two-tier system that’s set up to favour a particular kind of customer.

And if things don’t change, it’ll widen the gap. That £85 million? It’s going to seem like small change compared to the predicted £315 million that the pavement tax could generate in the next five years.

And in a cost-of-living crisis that doesn’t seem to show any sign of ending, that’s a really grim picture of things to come.

A two-tier motoring system is not the way to go green.

Since we’re all going to have to take the hump and go electric sooner or later (regardless of our income bracket), this unequal tax system needs to be kicked to the curb.

And the sooner, the better.

Tackling the problem

You’ll find no ostriches here at Carparison HQ: we like our heads firmly out of the sand, thanks. We’re not afraid to talk about the things that need changing in the motor industry.

Like, the gender pay gap and how it could slow down the transition to electric cars. 

Like, making leasing more accessible for women (we’ve taken action on that one ourselves actually, with our female-only automotive advice line).

And the big topic right now is whether it’s worth relaxing the ZEV mandate. While big players like Stellantis want to move the goalposts on going green, the UK government needs to steer in the direction of more active action.

Like making the EV market fairer and more favourable for all customers.

New incentives always help, but solving the pavement tax problem? It should be a high priority.

But how to do it?

It could be as simple as redressing the unequal tax rates, but there’s more the government could do to make this happen. Like, repurposing existing, unused funds.

Happily, there is a big pot of money gathering cobwebs which is up for grabs. 

The  government tucked £950 million aside in 2020 to help with grid support at motorway charging stations. And to this date, nary a penny has been spent.

We say, if Labour intends to divert this cash to new pastures, they could throw it at solving the 15% VAT discrepancy. 

And remove what could end up being a big barrier in the push to make our roads electric. 

That’s definitely something to think about for the next big budget shakeup.