Value Added Tax, Public EV Charging, and Global Politics

On 12 May 2026, following its defeat in the First-tier Tax Tribunal (FTT) in Charge My Street Limited v HMRC [2026] UKFTT 318 (TC), HMRC published a new Revenue and Customs Brief 4 (2026) on the VAT treatment of electricity supplies from public electric vehicle charge points.

Although the decision of the FTT contradicts HMRC's longstanding guidance and practice, the new Brief confirms that:

• HMRC will appeal to the Upper Tribunal, and
• HMRC's current policy (that VAT should be charged at 20%) remains, for now, effective.

However, if the FTT's decision is upheld, the VAT treatment of public EV charging will be brought into line with domestic home charging.

Charge My Street ("CMS") is a community benefit society operating public EV charge points across the north of England. Its sites are typically in places designed to serve residents who lack off-street parking and cannot charge their cars at home.

HMRC rejected the claim, relying on their own published guidance and asserting that, "the recharging of electric vehicles, when using public charging points is always treated as standard rated for VAT… because these supplies are made at various places such as car parks, petrol stations and on-street parking, not to a person’s house or building".

CMS appealed to the FTT.

For three main reasons:

• The public purse
  From HM Treasury's perspective, the VAT revenue differential between applying a 5% and a 20% rate on public EV charging will, at a time where the public finances are (at best) challenging, be significant. It is also likely to become increasingly important in the years ahead as EV adoption expands, and pressure to replace fossil fuel tax revenues, support the energy transition, and build the necessary supporting infrastructure, accelerates.
  
  

• Infrastructure investment
  For charge point operators, and potential investors in the industry, an applicable rate of 5% (rather than 20%) VAT on public electricity supplies could materially improve the economic profitability of business models, asset values and return on investment assumptions, making the industry more attractive to both new entrants and providers as well as private capital investors.
  
  

• Fiscal neutrality
  A core principle of VAT law is that it should be fiscally neutral — that is, similar supplies, meeting similar consumer needs, should attract the same VAT treatment. On the face of it, this causes a difficulty for HMRC's position because a driver charging their EV at home will pay 5% VAT, while a driver who cannot charge at home and must instead charge a similar car with the same electricity at a public charge point will have to pay 20% VAT.

The legal dispute was whether CMS's supplies fell within Note 5(g) of Item 1 of Group 1 of Schedule 7A VATA 1994, which states that:

On the facts of the case, the dispute would be decided by assessing whether two key elements of Note 5(g) were satisfied:

• First, was CMS's supply of electricity "to a person at any premises"?
  The FTT had to decide whether this requires the premises to be the recipient EV owner's own building, or does it merely need any identified person and any identified location?
  
  
• Second, was the supply "at a rate exceeding 1000 kilowatt hours a month"?
  The FTT had to decide how to measure the rate of supply: whether it was simply measured over the course of a whole month, or should the monthly rate be pro-rated to the actual duration of each supply to each EV owner?

The FTT decided the case in favor of CMS.

On the meaning of premises, the FTT rejected HMRC's contention that the "premises" means buildings that must belong to the recipient of the supply.

There is, then, no requirement for the premises to have some connection with the recipient. The inclusion of the word "any" is expansive; not restrictive. Had Parliament intended a narrower meaning, the FTT ruled, it would have said so.

On calculating the applicable rate, again applying the "plain natural meaning of [the] requirement", the FTT decided that the reference to "1,000-kWh per month" simply means the total electricity supplied by a single supplier, to a single person, at a single premises, during a calendar month. The legislation did not support HMRC's contention that the total had to be pro-rated to the duration of each individual supply. Indeed, adopting that interpretation would produce some odd results, with the VAT treatment varying depending on the length of contract rather than the nature of the supply. The FTT accepted that exceptions to the standard rate needed to be interpreted strictly, but not restrictively, and so declined to read the wording necessary to support HMRC's position into the law.

While it will be determined according to its facts, the importance of Charge My Street is not limited to its facts. Some of the issues at stake impact the larger fiscal and policy debate about how the UK taxes motoring and energy as it attempts to transition towards 'net zero'.

• A declining fuel duty base
  UK fuel duty currently contributes approximately £24.4bn of tax revenue each year, but that figures is falling year-on-year. The Office for Budget Responsibility (OBR) has forecast that receipts will half — to approximately £12bn — by the 2030s, and approach zero by 2050, as vehicles shift from petrol and diesel combustion engines to electric. Unsurprisingly, this has been identified as a substantial risk to the sustainability of the public finances.
  
  Compounding this structural decline, the fuel duty rate is a sensitive political issue. To great fanfare, it has not been increased since 2011, while the 'temporary' 5p cut (introduced in 2022 as a response to the energy price shock caused by Russia's invasion of Ukraine) has also been left in place. While the Chancellor announced at Budget 2025 that the cut would be unwound (in stages between October 2026 and March 2027), the policy is now unlikely to survive, and the 'temporary' 5p cut is likely to remain in place, following the outbreak of the US-Iran war and the closure of the Strait of Hormuz.
  
  

• The introduction of eVED
  As part of efforts to address the revenue gap left by falling fuel duty receipts in the medium to longer term, the government also announced its intention to introduce an Electric Vehicle Excise Duty (eVED).

The OBR estimates eVED will raise £1.1bn in 2028/29, rising to £1.9 billion by 2030/31; enough to offset just one quarter of the projected loss in fuel duty receipts. A consultation on the design of eVED – Consultation on the Introduction of Electric Vehicle Excise Duty (eVED) – ran from November 2025 to March 2026.

• Balancing revenue needs with adapting to climate change
  Car manufacturers have been mandated to end the sale of new pure petrol or diesel cars by 2030; by 2035 all new cars sold will have to be zero-emission. However, the OBR has also forecast that the introduction of eVED will result in approximately 440,000 fewer EV sales across its five-year forecast period. Declining demand for EVs jeopardizes the UK's ability to transition away from fossil fuels, which in turn threatens its net zero ambitions and, increasingly, energy security.
  
  The government has stated that it expects approximately 320,000 of the sales shortfall to be offset by additional enhanced support measures — including £1.3bn of additional funding for the Electric Car Grant and investing a further £200m in the roll-out of additional charge-point infrastructure. In addition, they argue, the proposed UK eVED rate is lower than equivalent mileage charges – for example in New Zealand and Iceland (both equivalent to more than 5p per mile), where the introduction of the taxes has resulted in significant falls in EV uptake – meaning the impact on demand may not be as severe as forecast.
  
  
• Tax and fairness
  Charge My Street also highlights a broader concern about the 'fairness' of the EV transition.
  
  It is estimated that approximately eight million households in England lack off-street parking and, therefore, the ability to install home-charging points. As a result, these households cannot access lower domestic EV charging tariffs, charged at reduced rate VAT, and must rely on public charging, where costs can be up to ten times higher (and, according to HMRC, attract standard rate VAT). The adverse impact is likely to be disproportionately felt by urban residents, renters, and lower-income households.
  
  Exacerbating matters, representatives from industry have stated that standing charges for public charge point operators have increased by over 460% since 2021. Most of those costs will be passed through to the consumer.
  
  
• Parliamentary and industry scrutiny
  The Transport Committee has recently completed the oral evidence stage of its inquiry, Supercharging the EV transition, examining these tensions.
  
  In oral evidence in April 2026, the Minister for Decarbonisation, Kier Mather MP, described the eVED as necessary to "continue to fund critical infrastructure on the road network" while maintaining that EV drivers will still pay "significantly less tax on the miles they drive" than petrol and diesel drivers. The Committee pressed the government on whether eVED is "the right policy at the wrong time", given that the EV market is still maturing and many consumers still need to be convinced to switch.
  
  Of more direct relevance to the issues in Charge My Street, the Committee also questioned the government on any plans to equalize the VAT treatment of electricity supplies. When pressed on the point, the Minister merely confirmed, "I have conversations with my Treasury counterpart, Dan Tomlinson, on these questions and will continue to do so", which, while encouraging, is about as non-committal as is possible. The industry has been less equivocal. ChargeUK, a trade association representing the UK’s EV charging infrastructure companies, has been reported as describing HMRC's decision to appeal "disjointed and disappointing", urging that equalizing the VAT "should remain on the table regardless of this ruling".
  
  The publication of the Transport Committee's report and recommendations, expected in the coming months, is eagerly awaited.

HM Treasury's review is expected to "report by Q3 [2026]" and is equally eagerly awaited by industry.

In short, the government is facing a trilemma and must balance:

• Needs to replace declining fuel duty revenues
• Needs to accelerate EV adoption to meet climate commitments, and
• Needs the cost of the transition to shared fairly at a time of geopolitical instability and uncertainty.

This FTT decision is not the end of the road for Charge My Street.

HMRC have already confirmed that they will appeal against the FTT's decision to the Upper Tribunal, and that their position remains that "standard rate VAT applies to electricity supplied through public EV charging infrastructure". As a decision of the FTT, it does not set a binding precedent. However, it is a case that other charge-point operators, several with claims of their own, will be watching closely.

Charge-point operator businesses should already be considering the following actions:

• Comply with HMRC's stated policy and submit protective claims
  The FTT decision does not change the VAT treatment of electricity supplies made at public charge points.
  
  Charge point operators should, therefore, continue to comply with HMRC's stated policy and apply the 20% standard rate of VAT to their supplies. However, supplier businesses should also consider submitting protective claims for overpayment of output VAT to HMRC, as soon as possible, to preserve their position. In addition, to avoid any challenge of 'unjust enrichment', businesses ought to consider how they can reimburse customers for the excess amount of VAT collected from historical supplies.
  
  
• Review contractual arrangements
  Although not fatal to CMS's case, the contractual arrangements, terms and conditions, and the involvement of third-party app providers, "[did] not reflect the economic and commercial reality". For VAT purposes, the identity of the supplier and recipient of a supply is critical.
  
  Operators should ensure contracts reflect the commercial intention, especially where (as is likely) third-party app providers are involved. Poorly drafted contracts can be problematic.
  
  
• Tracking and recording
  Public charge-point operator businesses should ensure their systems are able to track and record electricity supplies made at any given location on a per customer per month basis to demonstrate supplies below the 1,000-kWh threshold.
  
  
• Monitor the progress of the appeal and the evolution of policy
  The case covers several important legal points that directly impact businesses operating in an important and growing sector.
  
  Whatever the decision of the Upper Tribunal, it is entirely possible that the case will progress to the higher courts. However the case is ultimately decided, it is likely to have significant financial implications for the Treasury, charge point operators, and potential investors.
  
  Businesses impacted should be tracking the case, the Transport Committee's 'Supercharging the EV transition' inquiry, and HM Treasury's review of the cost of public EV charging, closely.

We advise businesses on their VAT position across the full range of corporate and infrastructure transactions. We can help stress-test contractual arrangements, advise on structuring businesses operations to optimise VAT recovery, and support and assess claims for repayment of overpaid VAT.

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