Chancellor Rachel Reeves is facing pressure to reform the Expensive Car Supplement (ECS) tax, which is currently deterring many motorists from switching to electric vehicles (EVs). The tax, introduced in 2015, requires vehicle owners to pay £425 annually for five years if their car costs over £40,000. Experts argue that this threshold is now disproportionately affecting EV drivers, as around 64% of electric vehicles fall above the £40,000 limit.
The Impact on Electric Vehicle Adoption
Industry experts, including Matthew Walters, head of consultancy services at Ayvens, have urged the Government to reconsider the ECS threshold. Walters noted that the current threshold was expected to apply to only 5% of new cars when introduced but now affects a significant majority of EVs. “The supplement now disproportionately affects those choosing cleaner vehicles,” he said.
The ECS tax has been criticized for creating an additional financial burden on EV drivers, despite their vehicles having lower running costs. Since April 1, 2025, electric car owners have been required to pay the standard rate of Vehicle Excise Duty (VED), costing £195 annually. Previously, EV drivers were exempt from this tax.
Calls for Reform
Lilian Greenwood, Minister for the Future of Roads, hinted that changes to the ECS could be forthcoming. Experts are calling for the threshold to be raised to at least £50,000 to encourage more drivers to switch to EVs. Any changes would need to be implemented before April 2026, when affected electric vehicles are to be re-taxed.
The calls for reform come as the UK Government faces pressure to support the adoption of electric vehicles. Walters emphasized the need for “timely, consistent tax policy that supports – not disrupts – their investment decisions.” A revision to the ECS, clearly communicated and implemented with adequate notice, would provide fleets with the confidence to continue leading the shift to cleaner mobility.
The issue highlights the challenges in transitioning to zero-emission transport while maintaining fair taxation policies. As the UK continues to promote the adoption of electric vehicles, policymakers must balance environmental goals with the financial realities faced by motorists.
