UK lifts luxury EV tax cap

The increase was announced as part of the Autumn Budget 2025, which set out a package of motoring tax changes under Chancellor Rachel Reeves. (gov.uk) The measure specifically adjusts the Vehicle Excise Duty “Expensive Car Supplement” (the luxury‑car add‑on) and that additional charge is levied in years two through six of a vehicle’s life; official rate tables for 2026 include a £440 additional rate. (gov.uk) The government applied the new treatment retrospectively to zero‑emission vehicles that were first registered from 1 April 2025, so some cars bought since then will benefit when their next tax licence runs after the change. (gov.uk) Popular premium models that sit in the former £40k–£50k band and therefore stand to avoid the supplement include the Tesla Model Y Standard (from £41,990), the Polestar 2 (starting at about £45,160) and the BMW iX1 (available from roughly £43,545). (honestjohn.co.uk) Separately, company‑car Benefit‑in‑Kind rates for zero‑emission vehicles are rising (EV BIK moves to 4% in 2026/27, up from 3%), which increases monthly take‑home costs for employees — for example a basic‑rate taxpayer on a £40,000 EV would see a monthly company‑car tax rise from about £20 to £26.67. (regit.cars) Treasury documents and commentaries say the threshold change was framed to help offset the effect of the planned electric Vehicle Excise Duty (eVED) pay‑per‑mile charge that the government is consulting to introduce from 2028. (assets.publishing.service.gov.uk) Because the expensive‑car supplement is applied annually for five years, the additional levy at £440 a year totals £2,200 over that period — a sum buyers of mid‑priced premium EVs can now avoid if their vehicle’s list price is below the revised electric threshold. (assets.publishing.service.gov.uk)