InstaVolt says the extra revenue will go straight into the tax collector's pocket.
An electric car charging network has decided to raise its prices after the government clarified the VAT levied on power for battery-powered cars. InstaVolt said the brief from Her Majesty’s Revenue and Customs (HMRC) had effectively increased the company’s costs, and that increase would “reluctantly” be passed on to customers.
The HMRC brief made clear that the “de minimis” provision, which sees VAT reduced to five percent for “small quantities of electricity” does not apply to electric vehicle charging. According to HMRC, that provision can only apply if the supply is feeding a house or building on an “ongoing” basis and amounts to less than 1,000 kilowatt hours (kWh) a month.
As a result, the memo clarified that electric vehicle charging through charging points in public places should be charged at the “standard” rate of VAT. With no exemptions or relief allowed for electric vehicle (EV) charging, that means VAT should be charged at 20 percent.
However, InstaVolt has confirmed that it was previously charging customers for VAT at five percent, and has had to revise its pricing in light of the clarification. In a statement, the company’s CEO said the “extremely disappointing” HMRC brief “immediately increases the cost to InstaVolt by 15 percent”.
With that in mind, the company increased its pricing on May 27, raising its ‘base rate’ from 35p per kWh to 40p per kWh. The firm claims it will not profit from the price hike, saying the increase is “entirely attributable to VAT, which will all be passed to HMRC”.
“Since installing our first rapid charger in 2017, we have revolutionised the public charging experience for drivers,” said InstaVolt CEO Adrian Keen. “We were the first major network to introduce straightforward pence per kilowatt-hour pricing and contactless payment, and put reliability and customer experience at the forefront of our offer. We have stayed true to those principals, and maintained our price of £0.35p per kWh despite the wholesale energy price alone increasing by over 20 percent in the past four years.
“We will continue to engage with the government to reduce the rate of VAT on public EV charging to five percent, in line with domestic energy tariffs. If HMRC reverses its position we will immediately reduce our price. We hope HMRC recognises this mistake quickly, as taxing EV drivers with no ability to charge at home is not fair.”