The Hidden Costs of Personal EV Charging In 2026
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Electric vehicles are supposed to be more cost-effective to run. That’s one of the main reasons people make the switch. Lower fuel costs, lower maintenance, cleaner driving - it all adds up to a compelling case. But for many employees across the UK, especially those who rely on public charging, that promise can feel slightly hollow the first time you charge your EV.
You switch from petrol, expecting savings. Instead, in some parts of the country, ultra-rapid charging now reaches as high as 87p per kWh in 2026! At that point, electricity doesn’t feel like the bargain it once did.
The issue isn’t that electric cars are inherently expensive to run. The issue is where (and how) you charge them.
Millions of UK households don’t have access to off-street parking. That means no driveway, no home charger, and no access to the lower 5% VAT domestic energy rate. Instead, they rely on the public EV network, where VAT is applied at a rate of 20% and infrastructure costs are significantly higher. The result is what we describe as a form of Energy Inequality. Two employees can drive the same electric vehicle, cover the same mileage, and yet face materially different running costs purely because one can charge at home and the other cannot.
This is the problem The Charge Scheme was designed to solve. By enabling EV charging salary sacrifice, employees can pay for charging from their gross salary and recover between 20% and 50% in tax and National Insurance savings.
In this article, we’ll break down the real cost of EV charging, explain the impact of VAT on EV charging, examine the limits of EV mileage reimbursement, and explore how EV charging salary sacrifice can help reduce electric vehicle running costs in 2026.
The VAT Gap: Why is Public Charging More Expensive?
One of the most overlooked drivers of rising charging costs is VAT on EV charging.
Home charging qualifies for 5% VAT because it is classed as domestic energy. Public charging, however, is treated as a commercial supply of electricity and taxed at 20%. That 15% gap creates a structural imbalance. Two drivers using the same vehicle and consuming the same electricity can face materially different costs depending solely on where they charge.
When combined with higher tariffs for Ultra-rapid charging, the disparity becomes more significant. Over the course of a year, drivers relying on public infrastructure can spend £300–£1,000 more than those primarily using home EV charging.
Salary sacrifice charging does not change VAT policy, but it does reduce the real impact of that policy. By deducting charging costs from gross salary, employees benefit from income tax and National Insurance savings, which effectively soften the VAT gap and bring public charging closer to home-charging economics.
Key Takeaways
VAT on EV charging is 20% on public chargers compared to 5% at home.
The 15% VAT gap compounds higher public tariffs.
Salary sacrifice reduces the effective cost through tax savings.
Is the 2026 EV Mileage Reimbursement Rate Enough to Cover Public Charging?
From 1 March 2026, the government increased the AER rates 2026 (Advisory Electricity) to 15p per mile. This uplift acknowledges that electricity prices have risen and that reimbursement needs adjusting.
However, many employees relying on the public EV network find that 15p per mile doesn’t fully reflect what they actually pay at the charger.
| Charging location | Electrical efficiency miles per kilowatt-hour (weighted by car sales) | Electricity cost per kilowatt-hour (pence) | Rate per mile (pence) | Advisory electric rate |
|---|---|---|---|---|
| Home charger | £4 | 26.10 pence | 7.26 pence | 7 pence |
| Public charger | £4 | 54.00 pence | 15.02 pence | 15 pence |
In practice:
Rapid and Ultra-rapid charging can equate to 22p per mile or more.
The flat rate does not account for the higher VAT on EV charging applied publicly.
Employees can experience a shortfall between reimbursement and real spend.
While EV mileage reimbursement remains helpful, it does not necessarily solve the broader issue of rising public charging costs UK drivers face.
EV charging salary sacrifice approaches the problem differently. Rather than applying a standardised mileage estimate, it calculates the real charging cost and processes that amount through payroll. The savings are therefore based on actual spend, not an assumed average.
Employees enrolling in 2026 lock in their vehicle choice at favourable rates, whilst charging salary sacrifice saves them 20-50% on ongoing charging costs throughout the lease period.
Key Takeaways
The AER rate is 15p per mile in 2026.
Public charging frequently exceeds this level.
Salary sacrifice reflects real costs, not flat assumptions.
The Hidden Time Cost of Public Charging
Cost is not just about pounds per kWh. It is also about time.
Many EV drivers now manage several EV charging apps, multiple payment methods, and varying tariff structures depending on location and charger speed. Reconciling receipts, separating business and personal mileage, and submitting expense claims can become a monthly administrative task.
For employees, that means friction. For payroll and finance teams, it means additional oversight and processing.
The Charge Scheme simplifies this landscape by consolidating charging into one app and card, automatically calculating real charging costs, and providing payroll-ready instructions for salary sacrifice. Business and personal mileage can be separated clearly, reducing ambiguity and manual reconciliation.
Reducing EV charging bills is important, but we believe reducing the complexity around them matters just as much!
Key Takeaways
Public charging often involves multiple apps and manual claims.
Administrative friction creates hidden cost.
Salary sacrifice centralises charging and payroll treatment.
How Does EV Charging Salary Sacrifice Reduce the Cost of EV Charging in 2026?
At its core, EV charging salary sacrifice is straightforward.
Charging costs are deducted from gross salary before income tax, and National Insurance is applied. Because tax is calculated on the reduced salary, the employee effectively pays less for the same charging session.
For a basic-rate taxpayer, this typically equates to 20% income tax and 8% National Insurance savings. For higher-rate taxpayers, income tax savings are even more significant.
For example:
Monthly public charging spend: £200
Without salary sacrifice:
£200 paid from net income
With salary sacrifice charging:
£200 deducted from gross salary
Tax efficiency reduces real cost by 20–50%, depending on the tax band
Over a year, that difference can exceed £650 - particularly for drivers without access to home EV charging! If you are looking at reducing EV charging bills with salary sacrifice, this model offers a practical, compliant approach.
Key Takeaways
Charging costs are deducted from gross salary.
Tax and National Insurance savings reduce real spend.
Savings typically range between 20% and 50%.
What Is The Total Cost of EV Ownership?
When considering the total cost of EV charging, the numbers become clearer if you think about them annually.
An employee spending £200 per month on charging faces £2,400 per year in energy costs. Without any tax efficiency, that is the full amount absorbed from take-home pay.
With EV charging salary sacrifice in place, the effective annual cost for a basic-rate taxpayer could fall to approximately £1,728. The structure also removes reimbursement gaps and administrative complexity.
For employers already offering EV salary sacrifice schemes, adding charging strengthens the financial proposition and improves uptake. It shows that their organisation recognises the full picture of electric vehicle running costs, not just the lease payment.
Key Takeaways
A £200 monthly charging spend equates to £2,400 per year without tax efficiency.
EV charging salary sacrifice can reduce that to around £1,728 for a basic-rate taxpayer.
The benefit improves total cost of ownership and strengthens the overall EV value proposition for both employees and employers.
Restoring the Financial Case for Electric Driving
Electric vehicles still offer long-term advantages, particularly when compared with volatile petrol and diesel prices. However, the cost of EV charging in 2026 has become more complex, and for drivers without home charging, the numbers can feel unexpectedly high.
Energy Inequality (the divide between driveway owners and everyone else) risks undermining the accessibility of electric mobility.
EV charging salary sacrifice does not eliminate infrastructure pricing or VAT policy, but it does rebalance the equation. By enabling employees to reduce EV charging bills through tax-efficient deductions, The Charge Scheme restores much of the financial logic behind the switch to electric.
Electric driving should not depend on whether you have a driveway; instead, it should depend on whether it makes financial sense. Charging salary sacrifice helps to make sure of that!
Frequently Asked Questions: EV Charging costs
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Public charging is treated as a commercial supply of electricity and taxed at 20%, whereas home charging is classed as domestic energy and taxed at 5%.
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Most employees save between 20% and 50%, depending on their income tax band and National Insurance rate.
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The Advisory Electricity Rate is 15p per mile from 1 March 2026.
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Yes. The scheme covers home, workplace and public charging.
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Mileage is declared monthly, and employers set scheme parameters, but there is no fixed national mileage cap specific to the charging benefit.
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Employees submit monthly mileage through the portal, and the system calculates real charging cost to ensure accurate payroll treatment.
Last updated: 25/02/26
Our pricing: is based on data collected from The Charge Scheme Calculator. All final pricing is inclusive of VAT. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The Charge Scheme is a product of The Electric Car Scheme™ – a trusted, trademarked brand dedicated to making electric driving more affordable. All rights reserved. The Electric Car Scheme is the trading style of The Electric Car Scheme Limited (company number 12646157, ICO number ZB030706, VAT number 439430195) and The Electric Car Scheme Holdings Limited (company number 13295877, ICO number ZB252629). Head office & registered address: The Shipping Building, 254 Blyth Road, Hayes, UB3 1HA. The Electric Car Scheme Limited provides services for the administration of salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608) is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender.
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