The government has announced a significant change to the so-called 'luxury vehicle tax', officially known as the Expensive Car Supplement, which will see nearly half a million electric vehicle (EV) drivers save £425 each year from April 2026. The threshold for the tax has been raised from £40,000 to £50,000, meaning many popular EV models will no longer be liable for the additional charge.
Impact of the Threshold Change
Research conducted by motor group Dick Lovett indicates that 475,836 drivers will benefit from this tax adjustment. Each driver will save £425 annually, amounting to a total of £2,125 over the five-year period that the charge applies. Previously, electric vehicles costing £40,000 or more and registered after April 1, 2025, were subject to the extra charge. With the new threshold, vehicles priced between £40,000 and £50,000 will now be exempt.
Examples of Affected Models
Specific models that will no longer face the annual charge include the BYD Sealion 7 Comfort, priced at £46,990. BMW's iX1 and iX2 lineups, when specified as standard, now fall beneath the luxury car tax threshold. This change provides greater financial relief for drivers of mid-range electric vehicles.
Alex Lee, a motoring expert at Dick Lovett, commented: "For those looking at electric cars between £40,000 and £50,000, drivers can now expect to save £2,125 over five years. This also means that drivers will have more choice when it comes to mid-range EVs." However, he cautioned that not all models will be exempt, advising: "It's important for drivers to look into the specific car they are wanting to get to avoid any confusion."
Advice for Drivers
Drivers are urged to check individual vehicle prices carefully, as some models within certain ranges may still exceed the new £50,000 threshold. The change is expected to provide significant savings for many EV owners and increase the appeal of mid-range electric vehicles.
