From April 1, 2026, a significant update to the UK’s Expensive Car Supplement will provide electric vehicle owners with an additional £10,000 threshold before incurring the extra charge. This adjustment aims to address the rising costs of new EVs, which often exceed the current limit.
Current System and the Upcoming Shift
Under the existing rules, drivers pay an additional £425 annually for five years on vehicles with a list price over £40,000, starting from the second year of registration. This supplement originally targeted high-end petrol and diesel models, but many affordable family EVs from manufacturers like Hyundai, Skoda, Tesla, and BMW now surpass this cutoff, affecting everyday buyers.
The new policy raises the threshold to £50,000 exclusively for electric cars, allowing more EV purchasers to avoid the surcharge. Petrol, diesel, and hybrid vehicles will remain subject to the £40,000 limit.
Insights from the RAC
The RAC outlines the details: “The Expensive Car Supplement currently applies to all cars with a list price in excess of £40,000. Applying from the second year the car is first registered, it adds an extra £425 per year on top of the standard rate for five years. From April 2026, the list price threshold at which electric cars are subject to the tax increases from £40,000 to £50,000, meaning a lot more buyers of new EVs can avoid the charge. The lower £40,000 barrier will continue to apply to all petrol, diesel and hybrid models, however.”
HMRC’s Policy Details and Financial Impact
HM Revenue and Customs (HMRC) confirms the change will cost the government £50 million between 2026 and 2027. Officials note that the measure benefits individuals purchasing or owning EVs first registered from April 1, 2025.
HMRC further explains: “The change applies retrospectively, meaning that most vehicles registered from 1 April 2025 will not be required to pay the charge. Any vehicles taking out a second licence with effect before 1 April 2026 will be required to pay one year of the charge only. A further legislative change also ensures that all vehicle licences which first have effect on or after 1 April 2026 are subject to the increased threshold, regardless of when the licence is applied for.”
