Government should ‘amend’ expensive car supplement to boost EV demand, says industry boss
Mike Hawes from the SMMT says industry is ‘talking to Government’ about making the changes.
Government should ‘amend’ its changes to the expensive car supplement if it wants to boost electric vehicle demand, an industry leader has said.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said that the expensive car supplement – which adds an additional £410 per year in tax for the first five years following the first tax payment made when a car costing over £40,000 is a year old – applies to the ‘overwhelming majority’ of electric vehicles and made switching to an EV trickier for buyers.
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 on April 1, 2025, as part of a series of wide-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.
