Car tax from 2025 and the Expensive Car threshold

[deviousrich]

Morning all,

Given EVs becoming the norm (well ish... ) its no wonder we will be paying car tax from 2025, but does anyone else think that the additional "expensive car" threshold of 40k is going to catch a few people unaware?

Most EVs (bar the lovely MG) come in over 40k and by my reading you could then be paying £560 a year in road tax.

Given the price of electricity another £560 a year on top will make the calculation to "go electric" hang in the balance i think for many.

I wonder if car manufactures will respond and try and keep list prices under 40k (but i doubt it).

I was hoping when the Cyberster was announced they were going to keep it under that threshold but that seems a pipe dream now.

 

[Gomev]

I am currently looking into this and am not clear if cars bought new pre the deadline 2025 will ever have to pay the expensive (luxury) car tax. Some articles I read seem to imply they won't, some they will.

Reason I'm looking is because it's a great time to buy a second hand EV now and some of them luxury ones are looking really tempting........

This is from the gov.uk website and I think it implies that only EVs registered after the 1st April 2025 will be subject to the expensive car tax if over £40,000 list price. But am I right ?

'Zero emission cars first registered on or after 1 April 2017 will be liable to pay the lowest first year rate of VED which currently applies to vehicles with CO2 emissions 1 to 50g/km. From the second year of registration onwards, zero emission cars will move to the standard annual rate.

The Expensive Car Supplement exemption for EVs is due to end in 2025. New zero emission cars registered on or after 1 April 2025 will be liable to pay the expensive car supplement where eligible (currently those with a list price of or exceeding £40,000 are liable).'

Full context is here Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025

 

[maskull]

This only highlights the lip service our government has been showing for the EV revolution

 

[tsedge]

The threshold should have risen with inflation really, it has been £40k since 2017, which should be over £50k today, so it is also a stealth tax.

 

[Gomev]

The threshold should have risen with inflation really, it has been £40k since 2017, which should be over £50k today, so it is also a stealth tax.

I thought it was introduced in 2021, but I agree re inflation.

 

[deviousrich]

I am currently looking into this and am not clear if cars bought new pre the deadline 2025 will ever have to pay the expensive (luxury) car tax. Some articles I read seem to imply they won't, some they will.

Reason I'm looking is because it's a great time to buy a second hand EV now and some of them luxury ones are looking really tempting........

This is from the gov.uk website and I think it implies that only EVs registered after the 1st April 2025 will be subject to the expensive car tax if over £40,000 list price. But am I right ?

'Zero emission cars first registered on or after 1 April 2017 will be liable to pay the lowest first year rate of VED which currently applies to vehicles with CO2 emissions 1 to 50g/km. From the second year of registration onwards, zero emission cars will move to the standard annual rate.

The Expensive Car Supplement exemption for EVs is due to end in 2025. New zero emission cars registered on or after 1 April 2025 will be liable to pay the expensive car supplement where eligible (currently those with a list price of or exceeding £40,000 are liable).'

Full context is here Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025

thats a good point re the expensive bit only kicking in for new cars post 1st April 25 - i hadnt spotted that bit!

 

[tsedge]

I thought it was introduced in 2021, but I agree re inflation.

It was introduced in 2017.

Vehicle Excise Duty

www.gov.uk

 

[Ruislip Resident]

The car envy tax threshold will never increase from £40k. I wouldn't buy a car, new or used, if I had to pay it. I've no problem with the standard VED or pay per mile, when it is inevitably introduced sometime in the future, but not a tax based on envy.

 

[Gomev]

I think I have discovered the definitive answer as to whether it will apply to second hand 'expensive' EVs. It won't, it's not being backdated like the normal VED.
So buying a second hand cheap luxury EV won't attract luxury car tax.

Electric car rates from 1 April 2025​

Electric cars first registered on or after 1 April 2025: will pay the lowest rate of tax (first year rate), currently £10.

From the second year on, the standard rate kicks in and owners will need to pay £180 a year - the same rate petrol and diesel owners pay today (if they have a car first registered after 1 April 2017).

If the electric car costs £40,000 or more when new, the expensive car supplement will be added to the standard rate for five years.

As it adds to the standard rate, you will pay a supplementary rate during years two to six of ownership. Based on on today’s rates, that would mean electric car owners would pay an extra £390 on top of the standard rate of £180, to spend a total of £570 per year, for years two to six of ownership, before dropping back down to the standard rate from year seven of ownership and on.

Electric cars first registered between 1 April 2017 and 31 March 2025: will also pay £180 per year from April 2025.

The £40,000 expensive car supplement is not being backdated, so an electric car first registered in 2024, for example, will not have to pay the supplementary rate of £355 on top of the standard rate from April 2025.

Electric cars first registered between 1 March 2001 and 31 March 2017: in effect, electric cars started coming to the mainstream market around 2010.

But for those who have an electric car registered before 31 March 2017, owners will be eligible to pay the ‘band B rate’ as listed below, which is £20 a year for the 22/23 tax year.

This is taken from Car tax explained - Which?

 

[JuziWomble]

Electric cars first registered between 1 April 2017 and 31 March 2025: will also pay £180 per year from April 2025.

Oh well - Back to two car Taxation from next year then ... Both of ours fall into this bracket ... Boooo!!

 

[Les burrows]

I am currently looking into this and am not clear if cars bought new pre the deadline 2025 will ever have to pay the expensive (luxury) car tax. Some articles I read seem to imply they won't, some they will.

Reason I'm looking is because it's a great time to buy a second hand EV now and some of them luxury ones are looking really tempting........

This is from the gov.uk website and I think it implies that only EVs registered after the 1st April 2025 will be subject to the expensive car tax if over £40,000 list price. But am I right ?

'Zero emission cars first registered on or after 1 April 2017 will be liable to pay the lowest first year rate of VED which currently applies to vehicles with CO2 emissions 1 to 50g/km. From the second year of registration onwards, zero emission cars will move to the standard annual rate.

The Expensive Car Supplement exemption for EVs is due to end in 2025. New zero emission cars registered on or after 1 April 2025 will be liable to pay the expensive car supplement where eligible (currently those with a list price of or exceeding £40,000 are liable).'

Full context is here Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025

Interesting one Gomev as I read it cars registered after April 2025 over £40000 will be. Charge the higher rate the ones before 2025 will be on the standard rate.
Les

 

[siteguru]

Oh well - Back to two car Taxation from next year then ... Both of ours fall into this bracket ... Boooo!!

I guess the tax rate has gone up ... when it was first announced it was £165. ?‍

 

[tsedge]

I guess the tax rate has gone up ... when it was first announced it was £165. ?‍

Yes. this is a separate rise in the levels.

 

[tsedge]

It does make a mockery of what they say VED is for: "VED is a tax on cars based on CO2 emissions".

It is really just the treasury trying to hoover up money everywhere they can.

The £40k threshold is a form of luxuries tax really, if they were being consistent they'd put it on all products over a certain threshold. But then they'd have to pay it themselves!

 

[Anon70]

Another advantage of a leased car, payments are fixed for the lease term even if they start to put VED on electric vehicles

 

[Lguk]

I do have my eye on the higher end model mustang EV for when the MG is up. A nearly new/low mileage offering is quite attractive

 

[Gomev]

Interesting one Gomev as I read it cars registered after April 2025 over £40000 will be. Charge the higher rate the ones before 2025 will be on the standard rate.
Les

Exactly Les. The question was would the luxury car tax supplement be backdated like the standard level VED has been from 2025. But it fortunately won't be. So opportunities to buy second hand luxury for 20-30k (or even less).

 

[Les burrows]

Exactly Les. The question was would the luxury car tax supplement be backdated like the standard level VED has been from 2025. But it fortunately won't be. So opportunities to buy second hand luxury for 20-30k (or even less).

Well I don’t know to be honest but reading it the way I understood it at#2 no it won’t that is what I went on in your post #2 but then in #9 you appear to have a better answer coming from a which magazine article so it would seem no you will not have to pay great news if your going down that track.
As for myself I will be taking a left out of Anon70 at #15 on a lease next time something I have never done or even considered but nowadays there are some deals that make a lot of sense.
Led

 

[Gomev]

Well I don’t know to be honest but reading it the way I understood it at#2 no it won’t that is what I went on in your post #2 but then in #9 you appear to have a better answer coming from a which magazine article so it would seem no you will not have to pay great news if your going down that track.
As for myself I will be taking a left out of Anon70 at #15 on a lease next time something I have never done or even considered but nowadays there are some deals that make a lot of sense.
Led

There are indeed some good leases around but I'm old school, probably like you and have never done that before.
I think I will take the second hand route, one that I have always really done all my life. Buy a 2 year old car after it's taken the big depreciation hit. On Autotrader cars like Niro, Enyaq, Polestar etc 2 years old for £25-30k, A 4 year old Jag I-Pace on Carsa for just over 20k. The list is endless.
It's like being a kiddie in a sweet shop.

 

[Les burrows]

There are indeed some good leases around but I'm old school, probably like you and have never done that before.
I think I will take the second hand route, one that I have always really done all my life. Buy a 2 year old car after it's taken the big depreciation hit. On Autotrader cars like Niro, Enyaq, Polestar etc 2 years old for £25-30k, A 4 year old Jag I-Pace on Carsa for just over 20k. The list is endless.
It's like being a kiddie in a sweet shop.

I agree totally there are some bargains to be had was watching the BCA auctions on YT the other day and I year old Tesla M3 for under £20000 several 2year old under £18000 ipace under 20 then reality kicked in when 21 plate MG5 LR went for £10200 with 14000 miles on And a ZS 52kw under 2year old fetched Less than £12000 crazy prices
Les