While many of the comments in other areas were quite high level, for VAT the review was more detailed and identified specific changes for the Government to consider.
Firstly, the review called on the Government to address the different VAT rates for public and private charging of electric cars.
Currently, electric car owners pay 5% VAT on electricity costs when charging at home, but 20% when charging elsewhere. The review has called for this imbalance to be equalised in 2024, highlighting how the current treatment increases the cost for those who don’t have access to home charging. This is often more of an issue for lower income households, who are less likely to have access to a garage or off-road parking.
The review also said that repairing products should be made more affordable, and flagged the role that VAT can have in increasing repair costs. While this seems an easy potential solution, it should be noted that reductions in VAT are not commonly passed on to the end consumer.
Finally, the review recommended that the zero rates of VAT on energy efficiency measures such as heat pumps and solar panels should be maintained permanently.
Source Accountancy age
