Need to know: Car tax shake-up saves nearly 500,000 electric vehicle drivers £425 a year
- Nearly half a million electric vehicle drivers will dodge a £425 annual luxury car tax from April 2026 after the Government raised the threshold from £40,000 to £50,000.
- Research by motor group Dick Lovett reveals that 475,836 drivers will benefit from the tax change. Each will save £425 annually, totalling £2,125 over the five-year period the charge applies.
- Electric vehicles were previously exempt from the so-called 'luxury vehicle tax' but EVs costing £40,000 or more registered after April 1, 2025, became liable for the extra charge. The threshold increase means drivers of popular models priced between £40,000 and £50,000 will now dodge this additional cost.
- Specific examples include the BYD Sealion 7 Comfort at £46,990, which will no longer face the annual charge. BMW's iX1 and iX2 lineups now sit beneath the luxury car tax threshold when specced as standard.
- Alex Lee, motoring expert at Dick Lovett, said: "For those looking at electric cars between £40,000 and £50,000, drivers can now expect to save £2,125 over five years. This also means that drivers will have more choice when it comes to mid-range EVs."
- However, he warned that not all models will be exempt, adding: "It's important for drivers to look into the specific car they are wanting to get to avoid any confusion."
- Drivers are advised to check individual vehicle prices carefully as some models within ranges may still exceed the new threshold.
- READ THE FULL STORY: Cars no longer hit by 'luxury vehicle tax' include Audi, BMW, Skoda as new threshold takes effect