The bill amends Schedule 9 to the Value Added Tax Act 1994 by inserting a new Group 17 that exempts “the supply of electricity to public charge points.” It defines “public charge point” by reference to Regulation 2 of the Public Charge Point Regulations 2023, extends to the whole UK, and sets commencement for 6 April 2026.
This is a targeted tax change that may lower the VAT-inclusive price of public charging if operators pass savings through, but it also changes the VAT recovery position for suppliers and charge point operators. The exemption will reshape accounting, contracting and investment incentives across the public charging supply chain and will require HMRC guidance on application and edge cases.
At a Glance
What It Does
The bill inserts a new Group 17 into Schedule 9 of the VAT Act 1994 to make the supply of electricity to public charge points an exempt supply for VAT purposes. It does not alter other taxes or directly regulate charging prices.
Who It Affects
Electricity wholesalers and retailers that deliver power into public charge points, owners and operators of public charging infrastructure, and motorists using public charge points indirectly through potential price changes. HMRC and local authorities will also face new administrative issues.
Why It Matters
An exemption removes output VAT but—unlike a zero-rate—typically prevents recovery of related input VAT, so operators may face higher net costs even as consumer-facing prices fall (if savings are passed on). The change alters investment economics for public charging deployment and reduces VAT receipts for the Treasury.
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What This Bill Actually Does
The bill takes a surgical approach: it amends the VAT statute by creating a discrete exemption for “the supply of electricity to public charge points.” It does that by inserting a new Group 17 in Schedule 9 (the list of exemptions). The bill does not define “public charge point” itself; instead it cross-refers to the definition already in the Public Charge Point Regulations 2023.
Because the text targets the supply of electricity to the charge point, the exemption attaches at the point where electricity is delivered into public charging infrastructure. That drafting raises practical questions about which contract is exempt — the contract between a networked charge point operator (CPO) and an electricity supplier, a behind-the-meter arrangement, or the charge a motorist pays at the point of sale.
The bill is narrowly legislative: it changes VAT treatment but leaves commercial pricing, network access rules and safety standards to other regimes.Timing and reach are explicit: the measure applies across England, Wales, Scotland and Northern Ireland and becomes effective on 6 April 2026. In practice, affected parties will need to change invoicing, accounting codes and VAT return entries; they will also need HMRC clarification on bundled services (for example, parking plus charging), how to treat metering arrangements, and how input VAT recovery will be apportioned where operators make both exempt and VATable supplies.Finally, the exemption will have distributional and behavioural effects.
If operators pass the exemption through, motorists may see lower VAT-inclusive prices at public charge points, supporting EV uptake. But because exempt supplies generally block recovery of input VAT, operators and electricity suppliers may absorb higher net costs or restructure contracts, which could blunt investment incentives or shift costs elsewhere in the supply chain.
Those implementation dynamics will determine how the bill performs in practice.
The Five Things You Need to Know
The bill adds a new Group 17 to Schedule 9 of the Value Added Tax Act 1994 to exempt “the supply of electricity to public charge points.”, It relies on the definition of “public charge point” in Regulation 2 of the Public Charge Point Regulations 2023 rather than creating a new statutory definition in the VAT Act.
The exemption has UK-wide extent and a fixed commencement date of 6 April 2026, so affected parties have a clear switch-over date for accounts and contracts.
Legally, the exemption removes output VAT on the covered supplies but—unlike zero-rating—generally prevents suppliers from reclaiming VAT on related inputs, shifting the VAT burden onto suppliers or asset owners unless contracts are restructured.
The drafting focuses on electricity “to” public charge points, not explicitly on the retail sale of charging to motorists, creating uncertainty about which commercial arrangements are covered and requiring HMRC interpretive guidance.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Adds ‘Supply of electricity to public charge points’ to the VAT exemptions index
This provision amends the Schedule 9 index to list the new Group 17. Functionally it is housekeeping but signals Parliament’s intent to treat the supply as part of the statute’s exemption structure. Practically, the indexed entry guides accountants and tax software to apply the exemption code where appropriate.
Creates Group 17 and exempts the supply of electricity to public charge points
This is the operative clause: it inserts an item that says, in plain terms, that supplying electricity to public charge points is an exempt supply. Because Schedule 9 sets VAT treatment, this change eliminates output VAT on those supplies. The single-note approach (a cross‑reference to the Public Charge Point Regulations 2023) keeps the VAT Act short but shifts definitional weight to secondary legislation, which may complicate interpretation where charging arrangements are commercially complex.
Defines ‘public charge point’ by reference to prior regulations
Rather than a free-standing definition, the bill points users to Regulation 2 of the Public Charge Point Regulations 2023. That reduces drafting duplication but creates dependency: any ambiguity or future amendment to those Regulations will directly affect who qualifies for the VAT exemption. Tax commentators and practitioners will need to reconcile the regulatory definition with commercial realities (for example, mobile charging vans, event charging or combined parking/charging services).
Sets territorial application and effective date
Section 2 states that the Act applies across the UK and comes into force on 6 April 2026, with the short title fixed. The April start date aligns with the UK tax year and gives businesses a planning window; it also means that transactions straddling the date will require clear accounting cut‑offs and possibly contract amendments.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Motorists using public chargers — if charge point operators pass through the VAT savings, the consumer-facing price for a charging session could fall because output VAT will no longer be billed on the covered electricity supply.
- Local authorities and public sector bodies that operate charge points — reduced VAT on supplied electricity can make operational budgets stretch further for publicly provided charging services, improving affordability for council-run networks.
- Policymakers and EV-adoption advocates — the exemption is a targeted fiscal measure that can be deployed to encourage public charging availability and reduce the effective cost of using public infrastructure, supporting decarbonisation goals.
- Fleet operators and businesses relying heavily on public charging — a lower effective charging price at publicly-operated points improves operating economics for businesses that do not have private depot charging.
Who Bears the Cost
- HM Treasury — exempting these supplies will lower VAT receipts relative to standard-rated sales of electricity and reduces tax revenue unless offset elsewhere in the budget.
- Charge point operators (CPOs) and electricity suppliers — because exempt supplies normally prevent recovery of input VAT, operators and suppliers may face higher net costs on construction, installation and operating expenses unless they restructure contracts or receive compensating payments.
- Electricity wholesalers and metering/servicing contractors — firms that supply goods and services to CPOs may lose the ability to pass through VAT recovery benefits and could experience margin pressure or contract re-pricing.
- HMRC and tax authorities — the exemption will increase compliance and enforcement workload due to classification disputes, bundled services, and transition accounting, imposing administrative costs on the revenue authority.
Key Issues
The Core Tension
The central tension is between lowering consumer-facing VAT costs to encourage public charging use and the parallel effect of denying suppliers the ability to reclaim input VAT—an action that can raise the operators’ net costs and discourage investment. The bill solves the immediate visible price issue for end users but risks creating hidden tax burdens that could reduce supply or shift costs elsewhere.
The bill is short and precise, but that brevity creates practical and legal friction points. Most consequential is the difference between exemption and zero-rating: exempting an activity prevents suppliers from reclaiming input VAT on associated costs, which can increase the net cost of building and operating public charge points.
That outcome could blunt one of the policy goals commonly associated with lowering consumer-facing prices—because operators facing unrecoverable VAT may raise pre‑VAT prices, delay roll-out, or seek alternative commercial structures (for example, outsourcing or vertical integration) to preserve input recovery.
A second implementation challenge is the bill’s drafting focus on the supply "to" public charge points. VAT liability depends on identifying who is the supplier and where the supply is treated as made.
The exemption could apply to the contract between an electricity supplier and the CPO, but not to a separate retail transaction where a motorist pays for a charging session. That creates scope for tax planning: firms might try to reframe arrangements (metering ownership, supply contracts, or bundled services like parking plus charging) to preserve VAT recovery or shift costs.
Resolving those issues will require detailed HMRC guidance or case‑by‑case rulings, and potentially further legislative amendments.
Finally, the cross-reference to the Public Charge Point Regulations 2023 leaves the scope of the exemption tied to regulatory definitions that may not perfectly align with commercial models (mobile chargers, event sites, or private-access but publicly-used points). The government will need to consider whether transitional relief, explicit guidance on apportionment and partial exemption, or complementary measures (for instance capital allowances or direct subsidies) are necessary to avoid perverse outcomes where the exemption raises the cost of provision while aiming to lower the consumer price.
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