7:44 am, May 16, 2025
The SMMT is calling on the Government to make changes to the expensive car supplement in order to boost consumer demand for EVs.
The trade body says that the tax measure now applies to the ‘overwhelming majority’ of EVs and is putting people off going electric.
The supplement adds an extra £410 per year in tax for the first five years of a car’s life following the first tax payment being made.
The threshold for the charge has been set at £40,000 since 2017 and SMMT chief Mike Hawes says that talks are ongoing about re-examining the rate.
He said: ‘We’re talking to Government about whether they will amend that because that was introduced in 2017.
‘Set at a rate of £40,000 vehicles and above, it hasn’t moved since 2017.
‘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.’
Given that the expensive car supplement can add £410 per year in tax on top of the standard rate, it could see buyers of new electric vehicles facing up to £600 a year in road tax until the vehicle is six years old.
Previously, electric vehicles had been exempt from the additional tax, but that exemption came to an end last month as part of a series of sweeping changes to vehicle taxation.
To coincide with the change, Vauxhall cut the prices of all of its top-spec electric vehicles to ensure that they fell underneath the £40,000 threshold.
Choice of EVs for UK car buyers reaches record high
Hawes’ comments came after the SMMTs latest figures revealed that the selection of EVs available to British drivers has reached an all-time high.
Analysis revealed that a record two in five new car models on sale in the UK are now available as a pure electric version.
The SMMT found that car buyers can choose from more than 130 battery electric new car models, up from 102 a year ago, with more than 100 plug-in hybrid models also on sale.
Pure electric new cars now hold a 20.4% share of the UK’s new car market, compared with 16.9% 12 months ago.
As well as changing the expensive car supplement, the SMMT also wants to see VAT halved on new EV purchases and reduced to the same level on public charging as home charging.
Hawes added: ‘There’s never been a better time to go electric – with more choice, better vehicle range and improving infrastructure offering a compelling driving proposition.
‘But the market still isn’t moving fast enough so bold support for consumer EV uptake – notably investment in incentives and infrastructure – is needed to accelerate decarbonisation efforts and make switching open to all drivers.’
