Sir Keir Starmer and Labour officials may U-turn on a major rule change just months after it launched. Labour chiefs have confirmed they will “consider” increasing the threshold for the additional “luxury” car tax fee many electric vehicle owners are being forced to pay.
EVs were previously exempt from Vehicle Excise Duty (VED) fees but this changed in April 2025. Under the new rules, EV owners were forced to pay the standard £195 annual charge and would be liable for Expensive Car Supplement (ECS) charges on new vehicles. This is an additional £425 fee which applies to brand new models with a list price of over £40,000 between the econ and sixth years on the road.
Usually this was reserved for top-end petrol and diesel cars but the high upfront cost of electric vehicles means most buying brand-new would be caught out.
This would add an additional £2,125 to the cost of EV car ownership over half a decade and may deter many from making the leap.
In the UK, over 1.4 million electric vehicles (EVs) were registered by the end of 2025 suggesting millions could be affected by the new rule.
However, a Treasury spokesperson has stressed rules could soon change to “make it easier” for motorists to purchase electric cars.
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The Government stressed any updates would provide “incentives through the tax system” to switching fuel types.
A spokesperson told Fleet News: “As announced at Autumn Budget 2024, the Government will consider raising the expensive car supplement threshold for EVs only at a future fiscal event to make it easier to buy zero-emission cars.
“Our approach ensures fiscal stability while providing incentives through the tax system such as freezing vehicle excise duty first-year rates for EVs to encourage the transition to electric and zero-emission vehicles.”
The update comes after motoring officials from across the board have demanded action was taken to reconsider the charges.
The Association of Fleet Professionals (AFP), the British Vehicle Rental and Leasing Association (BVRLA) and the Society of Motor Manufacturers and Traders (SMMT), have all called for the the threshold to be quickly updated.
Mike Hawes, chairman of the SMMT recently said: “Obviously inflation means an increasing number of numbers of cars are subject to that sort of fiscal drag and drawn into that, and the overwhelming majority of EVs are subject to an expensive car supplement, which is not the message you’re trying to give consumers.”