The Government is set to dump its controversial on new electric cars to help boost sluggish sales, a Labour minister has revealed in a leaked letter. Currently, there is a £40,000 price-threshold above which buyers must pay hundreds of pounds more in tax. But the threshold is set to be raised or axed entirely for battery-powered vehicles at the next Budget according to This is Money and MailOnline.
said the move would "make it easier to buy electric cars". Since 2017, people buying new petrol or diesel cars costing over £40,000 have had to pay an extra charge called the Expensive Car Supplement (ECS). The ECS is an additional premium tax on top of the standard rate of Vehicle Excise Duty (VED) levied on cars from the second year after they are registered. The ECS has also been applied to new sold after 1 April 2025 as part of a massive tax sting on motorists confirmed in the previous Budget.
The ECS has been blamed for hurting and making it harder for carmakers to sell enough electric vehicles to meet green targets. If they fall short, manufacturers could face billions of pounds in fines.
Lilian Greenwood has suggested the Government is planning a major on the ECS on EVs.
In response to a letter from Ben Maguire, the Lib Dem MP for North Cornwall, she wrote: "As announced at Autumn Budget 2024, the Government recognises the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero emission cars from 1 April 2025.
"We will consider raising the threshold for zero emission cars only at a future fiscal event to make it easier to buy electric cars."
Some car makers have already begun trimming the price of their electric car range so that they fall just below the £40k threshold to make them more attractive to private buyers.
According to new figures released by the Driver and Vehicle Licensing Agency this week, existing EV owners in the UK saved a potential £37.7million by renewing their VED before the Government's new car tax regulations came into effect on April 1 2025.
