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Some charge point operators seem to be able to get away with 5% VAT. I never quite got to the bottom of it, but it seems to involve their own 'interpretation' of the rules, and may well not last! It doesn't seem to result in cheaper cost to the consumer.
 
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Discussion Starter · #6 ·
I'm only a sporadic user of paid-for public chargers, so I hadn't thought too deeply about this. I see now that petrol pays full whack VAT plus of course the fuel duty, so it seems at least consistent to treat electricity that's only used for powering a vehicle the same as a liquid fuel.

Yet another reason to avoid charging away from home then!

Thanks for the feedback guys :)
 

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It's an oft-debated subject here. Taxes on motoring (fuel duty, VAT and VED) raise around £40bn/ year - 5% of total tax revenue. That's a black hole in the finances that will have to be filled somehow as ICE vehicles tail off, and VAT on electricity won't come close. (Nor should it simply be replaced like-for like, according to the IFS.)

Interesting article here:

 

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It doesn't seem to result in cheaper cost to the consumer.
Not with most providers. The only exception I know of is Osprey, who seem to pass on the saving to customers (£0.31/kWh via the app, £0.36 /kWh by contactless card).
 

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Ioniq 38kwh 2020
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Apparently there's a 'de minimus' level where 5% VAT can be applied:

Thats interesting. It suggests 33kWh per day. So if you take more than that then it's 20%? Instavolt charge only 5% I can see on the invoice (but I took less than 33kWh). Can't see they'd charge more if you took over 33kwh, unless they absorb it.
 

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They might do what a lot of business do, and charge you the same VAT inclusive price, and just adjust the base price to match.

McDonalds have always done this, haven’t they? They charge you the same rate whether you’re eating in or taking out, and fiddle it in the accounting later
 

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They might do what a lot of business do, and charge you the same VAT inclusive price, and just adjust the base price to match.

McDonalds have always done this, haven’t they? They charge you the same rate whether you’re eating in or taking out, and fiddle it in the accounting later
and shops in airports, which ask for your boarding card as if you are going to a (non-?)EU destination the tax is different but it doesn't get passed on... although that may have changed now.
 

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Don't you just love the complexities of this... if you buy a standing tree to chop down for firewood, VAT 20%. Buy wood to burn, VAT 5%. Back to the argument on Jaffa Cakes... VAT zero, cakes go hard, biscuits (20%) go soft.
 

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McDonalds have always done this, haven’t they? They charge you the same rate whether you’re eating in or taking out, and fiddle it in the accounting later
Very little of what they sell could be zero-rated.
"Hot takeaway food and drink ... is standard-rated. Cold takeaway food and drink is zero-rated, as long as it’s not of a type that’s always standard-rated (such as potato crisps, sweets and some beverages including bottled water). Hot takeaway drinks are standard-rated ... "
If your order includes a salad say then they may well ask if it's for in or out and the price charged may then reflect that.
 

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Doesn't the 'de minimus' 5% amount (aka. a business can apply it if using below a certain amount of kWh each day) only apply to the business rather than the consumer/charging point using it though? It would seem extremely complex for a charging point to change VAT rates depending on how much kWh is used. Surely the operator would need to be tiny - literally, have one charging point and one customer - in order to use it.

My understanding is all public operators must charge 20%. Which operators do you think are currently charging 5%?
 

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Don't you just love the complexities of this... if you buy a standing tree to chop down for firewood, VAT 20%. Buy wood to burn, VAT 5%. Back to the argument on Jaffa Cakes... VAT zero, cakes go hard, biscuits (20%) go soft.
I love how odd VAT is. I remember reading how in the Jaffa Cake case the judges sat and ate different biscuits as part of evidence gathering haha!
 

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Doesn't the 'de minimus' 5% amount (aka. a business can apply it if using below a certain amount of kWh each day) only apply to the business rather than the consumer/charging point using it though? It would seem extremely complex for a charging point to change VAT rates depending on how much kWh is used. Surely the operator would need to be tiny - literally, have one charging point and one customer - in order to use it.

My understanding is all public operators must charge 20%. Which operators do you think are currently charging 5%?
It would be on how much electricity is supplied to each customer surely, otherwise domestic electricity suppliers would clearly sell more than 33kWh per day in total.
Instavolt definitely only charge 5%, looking at their invoice in the app.
 

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It would be on how much electricity is supplied to each customer surely, otherwise domestic electricity suppliers would clearly sell more than 33kWh per day in total.
Instavolt definitely only charge 5%, looking at their invoice in the app.
That's really interesting re: Instavolt because others (like Ubitricity) charge at 20% and often complain about it.

I think you're right in that the VAT rate is determined in what scenario the electricity is being consumed. Energy that is supplied for domestic, non-business and charity use attracts a reduced rate of 5%. But business usage is 20%. And I think, in simple terms, business usage here is determined as being the commercial activity between two parties - aka. the seller (operator) and you the buyer. The 5% reduced rate would kick in if less was used per day on a particular meter, but I don't think it resets for each consumer, I believe that's for the whole supply. I also assume the supplier would need to make a declaration to HMRC each time in order to get the lower amount - which seems hugely burdensome.

I'm going to look into this more!
 

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That's really interesting re: Instavolt because others (like Ubitricity) charge at 20% and often complain about it.

I think you're right in that the VAT rate is determined in what scenario the electricity is being consumed. Energy that is supplied for domestic, non-business and charity use attracts a reduced rate of 5%. But business usage is 20%. And I think, in simple terms, business usage here is determined as being the commercial activity between two parties - aka. the seller (operator) and you the buyer. The 5% reduced rate would kick in if less was used per day on a particular meter, but I don't think it resets for each consumer, I believe that's for the whole supply. I also assume the supplier would need to make a declaration to HMRC each time in order to get the lower amount - which seems hugely burdensome.

I'm going to look into this more!
The 33kWh figure is also pretty vague, it's an "on average figure" so there's all sorts of ways of interpreting that, ie no one is likely to charge 33kWh per day at an Instavolt on average, over a week/month/year etc.
 

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The 33kWh figure is also pretty vague, it's an "on average figure" so there's all sorts of ways of interpreting that, ie no one is likely to charge 33kWh per day at an Instavolt on average, over a week/month/year etc.
Took some research but I looked into how Instavolt might be able to charge 5% VAT compared to others. I have written about it here >> How is Instavolt only charging 5% VAT?

It likely is a combination of the de minimis exemption and the way Instavolt rents land. I did ask Instavolt to confirm and they flat out refused to explain any of their VAT arrangements - a bit weird. I'm still interested to know why other operators don't follow suit if this is all kosher.
 
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