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THOUSANDS OF ELECTRIC VEHICLES (EVS) COULD STILL AVOID FALLING FOUL OF THE ‘LUXURY CAR TAX’ FOR THE FIRST TIME NEXT YEAR. 08:51, 02 Jun 2025Updated 08:52, 02 Jun 2025 The Treasury and Labour
Party government are mulling over a VED threshold increase on electric vehicles (EVs) to drive uptake. Thousands of electric vehicles (EVs) could still avoid falling foul of the ‘luxury car
tax’ for the first time next year, EVs became liable for a surcharge on vehicle excise duty (VED) known as the expensive car allowance or the luxury car tax from April. The annual surcharge
– currently £425 – applies from years two to six after purchase on any new vehicle priced above £40,000. The Government said last year that it recognised the “disproportionate impact” of
the threshold for those purchasing zero emission cars and would consider raising it for EVs at a “future fiscal event”. READ MORE: EASYJET WARNS UK TOURISTS FLYING TO TURKEY OVER 'ENTRY
REQUIREMENTS' THEY FACE A Treasury spokesperson told Fleet News: “As announced at Autumn Budget 2024, the Government will consider raising the expensive car supplement threshold for
EVs only at a future fiscal event to make it easier to buy zero-emission cars. Article continues below “Our approach ensures fiscal stability while providing incentives through the tax
system such as freezing vehicle excise duty first year rates for EVs to encourage the transition to electric and zero-emission vehicles.” The RAC advises for most electric vehicle drivers,
the cost of road tax (VED) is £195 a year. For new electric cars registered after 1 April 2025 with a list price that exceeds £40,000, there is also the Expensive Car Supplement, which
applies when the list price exceeds £40,000 for the first five years the standard rate is paid. Article continues below The Expensive Car Supplement is currently £425 a year, which means EV
drivers with an 'expensive car' will pay £620 per year for road tax. There is no exemption from VED for EV drivers, with free road tax axed on 1 April 2025. Since 1 April 2025,
drivers of electric vehicles need to pay for VED – road tax for the first time. For most EV drivers, this is £195 a year, while drivers of new electric cars with a list price that exceeds
£40,000 could pay as much as £620 a year.
