Motorists nationwide could face a new hike in tax charges from April 2026. This follows the government's confirmation that the Vehicle Excise Duty (VED) Expensive Car Supplement threshold will rise for zero-emission cars, including electric vehicles (EVs).
At present, the VED expensive car supplement, often dubbed the 'luxury car tax', applies to purchases exceeding £40,000 for zero-emission cars. However, as of April 1, 2026, this will surge by £10,000, pushing the threshold up to £50,000.
Due to this increase, motorists purchasing a car between £40,000 and £50,000 will no longer be obliged to pay the ECS charge when they obtain a licence. This Expensive Car VED is typically paid at annual rates and currently stands at £425 per annum for the five years following the initial tax payment made after the car turns one year old.
Previously, many zero-emission cars, including EVs, were exempt from the £195 flat rate that most newer cars are required to pay annually. However, this policy was altered on April 1, 2025, leading to EVs and hybrid cars being subject to the same rates as petrol and diesel vehicles.
Despite this, the threshold for the luxury car tax will not be increased for petrol and diesel cars in April. Most vehicles registered from April 1, 2025 will not have to pay the charge as the changes will apply retroactively.
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Any vehicle that takes out a 'second licence' effective before April 1, 2026 will only be liable for one year of the charge.
The first tax payment based on VED tax rates for cars registered on or after April 1, 2017, will vary depending on the car's fuel type and emissions rate. For petrol and some diesel vehicles, this can range from £10 for zero CO2 emissions to £5,490 for emissions over 255g/km.
However, the second tax payment onwards is calculated at the following rates for all petrol, disel, electric, and alternative fuel vehicles:
At current rates, vehicles with a price list of more than £40,000 need to pay the following rates:
Full details of VED rates can be found on the government website here.