At least 475,836 drivers will benefit from the UK EV tax exemption 2026, saving £425 a year on the expensive car supplement, according to new research
A shake-up in car tax regulations coming into effect in April 2026 means that owners of certain higher-priced vehicles will no longer be stung with an additional £425 annual charge. Fresh research from motor group Dick Lovett has shed light on just how many motorists stand to benefit from the updated tax rules.
Electric vehicles were previously exempt from the so-called ‘luxury vehicle tax’ — officially known as the Expensive Car Supplement — but it had been announced that EVs costing £40,000 or more and registered after April 1, 2025, would be liable for the extra £425 per year. However, the threshold has now been raised to £50,000 from April 1, 2026, meaning drivers of popular models priced between £40,000 and £50,000 will dodge this additional cost.
By examining UK vehicle registrations since April 1, 2025, Dick Lovett calculated that at least 475,836 drivers will benefit from the tax change, each saving £425 annually. Given that the charge applies for a five-year period beginning in the second year of a car’s “life”, those now exempt stand to save a total of £2,125 over five years.
After scrutinising 116 EV models across 23 ranges falling within the £40,000 to £50,000 bracket, Dick Lovett found that 475,836 registered vehicles are now free from the luxury car tax. It is worth noting that while some models within a range qualify for the exemption, others still exceed the threshold, so it is crucial for drivers to check their specific model rather than assuming an entire range is exempt.
Take the BYD Sealion 7 Comfort, for instance – with an on-road price of £46,990, drivers will no longer face the £425 annual charge, though other Sealion 7 variants remain liable. Meanwhile, certain entire model ranges have been freed from the tax altogether. BMW’s iX1 and iX2 lineups now sit beneath the luxury car tax threshold when specced as standard.
Models no longer subject to luxury vehicle tax following April 1 2026 amendment
- Audi Q4 e-tron (82,925 registered vehicles in Q2 and Q3 2025)
- BMW iX1and iX2 (46,017 registered vehicles)
- BYD Seal Design EV and Sealion 7 Comfort EV (7,216 registered vehicles)
- Cupra Tavascan (5,667 registered vehicles)
- Ford Capri (2,284 registered vehicles)
- Hyundai Ioniq 5 and Ioniq 6 (20,161 registered vehicles)
- Lexus RZ (2,209 registered vehicles)
- Mercedes-Benz CLA Electric and EQA (2,000 registered vehicles)
- MG IM6 Long Range (27 registered vehicles)
- Peugeot E-3008 and E-5008 (19,609 registered vehicles)
- Polestar 2 (44,347 registered vehicles)
- Skoda Enyaq (22,534 registered vehicles)
- Tesla Model 3 Premium, Model Y and Model Y Premium (211,125 registered vehicles)
Alex Lee, motoring expert at Dick Lovett, said: “For anyone looking at a new EV, this tax change offers a welcome savings opportunity. 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, and can add higher spec trims to these models without worrying about extra taxes being applied. For example, the MINI Countryman SE ALL4 models would already have been exempt from this luxury car tax, but buyers can now benefit by adding high spec configurations such as their Level 1 Pack (from £42,705) without triggering the additional tax on their car.
“However, with the changes in this tax, it’s important for drivers to look into the specific car they are wanting to get to avoid any confusion, as not all models will now be exempt. While BMW’s iX1 and iX2 ranges now fall under the luxury car tax threshold, the iX M60 models will not be exempt from the £425 per year charge.
“The tax is based on the list price of your vehicle at purchase, so be sure you’re not opting for trims that push you over the threshold without knowing. It’s always best to head into a dealership to chat through your options if you’re not sure on pricing.”
