UK to update electric vehicle tax exemption for luxury EVs

The UK is updating its electric vehicle tax exemption, to eliminate tax exemptions for luxury vehicles. Specifically, electric cars with a list price of £40,000 or above will no longer be exempt from the UK's car supplement road tax.

Starting from April 1, 2025, electric car owners in the UK will face a significant change in vehicle taxation. Any newly registered electric vehicle (EV) with a list price of £40,000 or above will no longer be exempt from the expensive car supplement road tax. This means that a vast majority of new EV owners could end up paying an additional £2,050 over five years, which translates into an additional £425 annual charge for five years.

The plan to drop the tax exemption has been public for several years, after being announced towards the end of 2022. The tax will affect existing EV owners, who will also start paying standard Vehicle Excise Duty (VED) from the same date.

Electric transporters will also be affected, moving to the rate for petrol and diesel light commercial vehicles, which is currently £290 for most vans. Electric motorbikes and three-wheelers will be switched to the rate for the smallest engine size, currently £22 per year. Once implemented, the new tax changes are expected to generate over £500 million annually, which will partly offset the declining revenue from the fuel tax.

Just in February, the UK vehicle registration statistics showed a surprising amount of growth in the BEV segment, despite the general car market falling for five consecutive months. At the time, BEVs accounted for a market share of over 25 per cent. Combustion models still held first place by a significant margin, however, despite falling in sales.

everyvehiclelease.co.uk, econostrum.info,

4 Comments

about „UK to update electric vehicle tax exemption for luxury EVs“

Chrrispy

12.03.2025 um 23:33

It makes no sense to have the 'luxury' tax at £40k. That's the price of a family car these days! The UK car taxation system is a shambles. You need a degree in bureaucracy just figure out the tax on a used car now. We should go back to a simpler system with perhaps 3 rates - for petrol, diesel and EV - applied to all cars

Tony Clark

13.03.2025 um 00:14

Isn’t paying £7000.00 in VAT enough to slaughter the new EV car buyer ? How about politicians take a pay cut on their expenses? Or as their turning a blind eye to the boat people, let the politicians house them in their own homes instead of expensive hotels, think of the money this would save for the country !

Ebenezer Coli

13.03.2025 um 00:34

Wouldn't it be great if such increases in Road Tax were used to fix roads. Instead they seem to be part of the funding for pointless, political reorganisation like 'county mayors'

Steve S

13.03.2025 um 11:17

So the Government sets a target for eliminating fossil fuelled cars and encourages the public to go to electric vehicles , so to put road tax at zero for such cars make perfect sense and public start the move. So the last thing you need is for the zero tax to be abolished which becomes a DETERRENT for people thinking of changing to EV. Another instance of making a policy then doing best to ensure it doesn’t work ..