Drivers looking to buy a new electric vehicle could benefit from the Chancellor's new tax rules, which could save them thousands of pounds a year.
Labour has overseen the rollout of new car tax changes, including hiking the rate of Vehicle Excise Duty for petrol, diesel and electric car owners.
Chancellor Rachel Reeves confirmed changes to the Expensive Car Supplement in last year's Autumn Budget, in a major boost for drivers interested in an electric vehicle.
The so-called "luxury car tax" imposes a fee worth hundreds of pounds on drivers who buy a vehicle with a list price of £40,000 or more from the second year of ownership.
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However, the Chancellor has increased the threshold associated with the tax for zero emission cars, hiking it from £40,000 to £50,000.
Rachel Reeves confirmed that the ECS threshold would jump to £50,000 for zero emission vehicles registered from April 1, 2025, onwards, despite the rules launching on April 1, 2026.
The Expensive Car Supplement also rose in line with inflation, meaning drivers now need to pay £440 a year for five years after the start of the second licence.
The new changes could incentivise millions of drivers to invest in an electric car, with total savings of £2,200 over five years.
More than 20 electric vehicles now avoid the Expensive Car Supplement tax
|GETTY
New data suggests that 23 zero emission models will no longer be subject to the annual surcharge after the threshold was hiked to £50,000.
Commenting on the change, Siobhan Doyle, consumer writer at Carwow, emphasised how drivers now have a wider choice of electric cars with lower ownership costs.
She said: "However, it's important to note that the expensive car supplement is implemented based on the purchase price of the car, meaning that not all versions of a model will necessarily be eligible.
"For example, if you go for a higher-specification trim, bigger battery, or simply pile on the optional extras, you could be charged extra if the car’s value exceeds £50,000."
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Electric cars that are no longer eligible for the Expensive Car Supplement tax
Audi Q4 e-tron
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BMW iX1
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Peugeot E-3008
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Polestar 2
Skoda Enyaq Coupe
Tesla Model 3 Premium
Tesla Model Y
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