Upcoming Changes to Vehicle Excise Duty
From April 1, 2026, a significant update to the UK’s Expensive Car Supplement will provide electric vehicle owners with an additional £10,000 allowance before incurring extra charges. This adjustment aims to support the transition to greener transport by raising the threshold for EVs from £40,000 to £50,000.
Under the current system, drivers pay an additional £425 annually for five years on vehicles with a list price exceeding £40,000, starting from the second year of registration. This supplement applies on top of standard Vehicle Excise Duty rates. While originally targeted at high-end petrol and diesel models, the rising prices of new electric vehicles have drawn many family-oriented options into the net, including models from Hyundai, Skoda, Tesla, and BMW.
Benefits for Electric Vehicle Buyers
The revised threshold means fewer EV purchases will trigger the supplement, easing costs for consumers opting for sustainable options. The RAC highlights that this change will allow more buyers of new electric cars to sidestep the extra fee. It specifies: “The Expensive Car Supplement applies to all cars with a list price over £40,000, adding £425 per year for five years from the second registration year. Starting April 2026, electric cars face the tax only above £50,000, while petrol, diesel, and hybrid models remain at the £40,000 limit.”
Financial and Retrospective Implications
HM Revenue and Customs officials indicate the policy will reduce government revenue by £50 million in the 2026-2027 fiscal year. The measure positively affects individuals purchasing or owning EVs first registered from April 1, 2025, with retrospective application. Most such vehicles registered from that date onward will avoid the charge entirely. For second licenses effective before April 1, 2026, owners pay just one year of the supplement.
Additionally, all new vehicle licenses starting on or after April 1, 2026, will adhere to the higher £50,000 threshold for EVs, irrespective of the application date. This legislative tweak ensures broader accessibility to electric vehicles without the burden of unexpected taxes.
