The number of UK motorists forced to pay a premium 'luxury vehicle' tax has surged dramatically, with 420,000 drivers caught in the levy last year alone.
Steep Rise in Drivers Paying the Premium
Official data obtained from the Driver and Vehicle Licensing Agency (DVLA) reveals a sharp 42 per cent increase in those paying the charge. The figure has jumped from 299,000 to 420,000 in just two years.
The tax, officially known as the Expensive Car Supplement, is an additional levy on top of standard Vehicle Excise Duty (VED). It is triggered when a new car is purchased for more than £40,000, costing owners an extra £425 per year for five years, or £2,125 in total.
Family Cars Caught in 'Luxury' Net
Industry experts argue that the frozen £40,000 threshold, which has not changed since its introduction, is now ensnaring modern family vehicles rather than just premium luxury models.
Ben Welham of the Marshall Motor Group explained the shift. "These are vehicles that many drivers wouldn't consider expensive by today's standards," he said. "A hybrid SUV, often the go-to choice for families seeking fuel efficiency, can easily tip over £40,000 when equipped with the safety and technology features buyers now expect. Many are practical family cars caught in a tax bracket intended for cars with a more premium feel."
Backlash and Government Defence
The policy has faced strong criticism from motoring groups. Brian Macdowell from the Alliance of British Drivers labelled it a "stealth tax" and "the politics of envy."
"It should never have been brought in in the first place," Macdowell stated. "For a government to continue this is nothing but an attempt to raise revenue by the back door. There is no justification to charge for multiple years and to pass the tax burden onto another driver – it’s outrageous."
However, a Treasury spokesman defended the levy. "It’s right that owners of luxury cars should contribute more, helping to fund improvements to our roads and stronger public services," they said.
The spokesperson also noted that two-thirds of new petrol, diesel and hybrid cars still fall below the threshold, and highlighted the government's freeze on fuel duty. They added that the increased threshold for electric vehicles aims to encourage cleaner vehicle uptake.
