The DVLA has issued a warning for drivers regarding changes to the Expensive Car Supplement, which now exempts electric cars costing £50,000 or less from the additional tax if first registered from 1 April 2025. This change was introduced by the Labour Party government after the supplement was originally implemented in April 2017.
What is the Expensive Car Supplement?
The Expensive Car Supplement is an additional fee levied on cars with a list price over £40,000, applied as part of the Vehicle Excise Duty (VED), commonly known as road tax. Previously, electric cars were exempt from the £425 flat rate that applies to new petrol and diesel cars costing more than £40,000. However, from 1 April 2025, hybrid and electric car owners became subject to the same rate as conventional vehicles.
Changes for Electric Vehicles
In a concession to EV owners, the government raised the threshold for electric cars to £50,000. The DVLA posted on X: “Buying an electric car? Electric cars costing £50,000 or less are no longer subject to the supplementary tax for expensive cars if you first registered them from 1 April 2025.”
HMRC previously stated: “This measure will positively impact individuals who purchase or own an EV first registered from 1 April 2025 with a list price between £40,001 and £50,000 by reducing their VED liability, with increasing numbers being impacted in future years as the zero-emission vehicle population grows.” HMRC claimed the measure would likely have a “behavioural impact” by incentivising the purchase of zero-emission vehicles.
Impact on Secondhand EVs
WhatCar? explained: “Luxury car tax applies to secondhand cars that were registered after 1 April 2017 and that had a list price of more than £40k when new. It will also apply to secondhand EVs registered after 1 April 2025. While secondhand EVs registered before 1 April 2025 will not be subject to luxury car tax, they will be required to pay the standard VED rate of £195 a year from 1 April.”
This means drivers of used electric cars registered before April 2025 will face the standard VED rate, while those with newer EVs under £50,000 avoid the supplement. The changes aim to balance environmental incentives with revenue generation.
