Asked by: Stephen Metcalfe (Conservative - South Basildon and East Thurrock)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the compatibility of differing VAT rates for public and domestic charging of electric vehicles with the principle of VAT neutrality.
Answered by Helen Whately - Minister of State (Department of Health and Social Care)
In order to keep costs down for families, the supply of electricity for domestic use attracts the reduced rate of VAT (five per cent).
Electricity supplied at EV charging points in public places is subject to the standard rate of VAT (twenty per cent). The Government has not specifically introduced a reduced rate for charging EVs at home. However, the practical challenges of differentiating between the electricity used at home for general domestic purposes, and electricity used to charge EVs currently mean that the reduced rate is effectively being applied to EV home-charging.
Applying the reduced rate of VAT to electricity supplied at EV charging points in public places would come at a cost. VAT makes a significant contribution towards the public finances, raising around £130 billion in 2019/20, and helps fund the Government's priorities including the NHS, schools, and defence. Any loss in tax revenue would have to be balanced by a reduction in public spending, increased borrowing or increased taxation elsewhere.
The Government has no current plans to review the current rate of VAT applied to EV charging.
Asked by: Stephen Metcalfe (Conservative - South Basildon and East Thurrock)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to Value Added Tax Act 1994 Schedule 7A, Group 1, Paragraph 5, on what basis some electric vehicle charging is taxed at a rate of 20 per cent VAT.
Answered by Helen Whately - Minister of State (Department of Health and Social Care)
The domestic use of fuel (including electricity that may be used to recharge vehicles) is subject to the reduced rate of VAT of 5%. As set out in Paragraph 5 of Schedule 1, where a supply to a person at their premises does not exceed 1000 kilowatt hours per month, this is deemed to be domestic use.
However, for this provision to apply, the supply of electricity must be to a customer’s house or building. Where this is not the case (such as where a vehicle is recharged at a public charge point), the electricity is standard rated.
Further clarification can be found in HM Revenue and Customs Brief 7 (2021): VAT liability of charging of electric vehicles.
Asked by: Stephen Metcalfe (Conservative - South Basildon and East Thurrock)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department is taking to increase wages and support the lowest-income households.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The government is increasing the National Living Wage to £9.50 an hour from April 2022, which keeps us on track to meet our target to end low pay by 2024-25.
We have taken decisive action to make work pay by cutting the Universal Credit taper rate from 63p to 55p and increasing Universal Credit work allowances by £500 p.a.
These measures will help us to build a high skilled, high productivity, high wage economy.