The UK government is reviewing a key tax policy that could ease the financial burden on electric vehicle (EV) buyers, signalling a potential increase in the £40,000 threshold for the Expensive Car Supplement (ECS), which critics say undermines the country’s electrification targets.
Under the current regime, cars priced over £40,000 are subject to an additional £425 annual charge for five years on top of the standard £195 Vehicle Excise Duty (VED). Electric vehicles, which had previously been exempt from the ECS and VED, will be subject to both starting April 1, 2025. With the average EV price hovering around £50,000, the combined tax burden is seen as a deterrent to private buyers.
“We will consider raising the threshold for zero-emission cars only at a future fiscal event to make it easier to buy electric cars,” Roads Minister Lilian Greenwood said in a letter to a Member of Parliament, according to Autocar. She acknowledged that the ECS may be having a disproportionate impact on EV sales.
Industry observers say the policy is out of step with the government’s Zero Emission Vehicle (ZEV) mandate, which requires 28% of manufacturers’ sales in 2025 to be electric, rising to 80% by 2030. In April, battery-electric vehicles (BEVs) accounted for just 20.4% of new registrations—up from under 17% a year earlier but still below target. Sales to private customers remain especially weak, representing only 10.7% of EV registrations, according to data from the Society of Motor Manufacturers and Traders (SMMT).
Carmakers have warned that the current tax structure risks stalling EV adoption. “It risks slowing adoption at a crucial time for the industry,” Ford said in a statement, while Stellantis UK chief Eurig Druce has also urged changes to support private buyers. March 2025 saw a spike in EV registrations ahead of the ECS implementation, but sales slumped the following month despite steep manufacturer discounts aimed at avoiding the tax hit.
Industry hopes for a boost may rest on a combination of policy reform and the arrival of more affordable EV models in the coming years. While the government has recently updated the ZEV mandate to allow hybrid sales beyond 2030 and simplified emissions credit trading, many in the sector argue that without a revision of the ECS, broader efforts to encourage EV uptake may fall short.