Car tax changes see popular EVs become exempt from £440 levy in snub to petrol and diesel owners

Hemma Visavadia
Mon, 20 Apr 2026 15:28:00 +0000

Nearly half a million electric vehicle owners across the UK are set to benefit from a tax change that came into force at the start of this month.

The Vehicle Excise Duty Expensive Car Supplement threshold for zero emission cars has risen from £40,000 to £50,000, meaning drivers of EVs priced within this bracket will no longer face the additional £440 annual charge.

The measure, which was first announced during the Autumn Budget last year, took effect on April 1, impacting thousands of vehicles.

New research has calculated that 475,836 drivers stand to gain from this legislative adjustment, potentially saving Britons hundreds of millions of pounds.

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Previously, any electric car with a list price exceeding £40,000 and registered after April 2025 attracted the ECS, known as the luxury car tax.

Under the revised rules, only zero emission vehicles costing more than £50,000 will be subject to the luxury car levy, while the £40,000 threshold remains for petrol and diesel vehicles.

Experts from Dick Lovett analysed UK vehicle registration data from the second quarter of 2025 onwards, examining 116 EV models across 23 different ranges that fall within the £40,000 to £50,000 price band.

The collective annual saving for affected motorists amounts to more than £202million.

Since the supplement applies for five years beginning from a vehicle's second year of registration, individual drivers who now escape the charge will keep an extra £2,200 in their pockets over that period.

The change applies retrospectively to most vehicles registered from April 1, 2025, with those who took out a second licence before this month required to pay just one year of the ECS.

Tesla owners represent the largest group of beneficiaries, with 211,125 registered Model 3 Premium, Model Y, and Model Y Premium vehicles now falling outside the supplement bracket.

The Audi Q4 e-tron follows with 82,925 registered cars, while BMW's iX1 and iX2 ranges account for 46,017 vehicles.

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Alex Lee, motoring expert at Dick Lovett, urged prospective buyers to scrutinise individual specifications before committing to a purchase, describing the cut as a "welcome savings opportunity".

He added: "This also means that drivers will have more choice when it comes to mid-range EVs, and can add higher spec trims to these models without worrying about extra taxes being applied."

He highlighted that while certain model ranges qualify entirely, others contain variants that exceed the threshold.

The BMW iX M60, for instance, remains subject to the £440 annual charge despite the iX1 and iX2 ranges being exempt.

Mr Lee pointed to the Mini Countryman SE ALL4 as an example where buyers can now add premium configurations such as the Level 1 Pack without triggering additional taxation, since it is based on list price.

Labour stated the measure aims to encourage the uptake of electric vehicles as part of its broader strategy to achieve net zero greenhouse gas emissions by 2050 and ensure all car sales are electric from 2035.

According to HMRC, the policy will positively affect individuals purchasing or owning EVs with list prices between £40,001 and £50,000, with growing numbers benefiting as the electric vehicle population expands.

The Office for Budget Responsibility has certified the Exchequer impact, projecting revenue reductions rising from £50million in 2025-26 to £505million by 2030-31.