Increase in the Vehicle Excise Duty Expensive Car Supplement threshold for zero emission cars
Published 26 November 2025
© Crown copyright 2025
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/vehicle-excise-duty-for-expensive-car-supplement-threshold-increase-for-zero-emission-vehicles/increase-in-the-vehicle-excise-duty-expensive-car-supplement-threshold-for-zero-emission-cars
Who is likely to be affected
Those who purchase or own zero-emission cars with list prices that exceed £40,000 and do not exceed £50,000.
General description of the measure
As announced at Budget 2025, this measure increases the VED (Vehicle Excise Duty) Expensive Car Supplement (ECS) threshold for zero-emission cars, from its current level of £40,000 to £50,000.
This means that zero-emission cars with a list price which exceeds £40,000, but does not exceed £50,000, will no longer be required to pay the ECS charge when they take out a licence which comes into effect on or after 1 April 2026 which is not a first vehicle licence. The threshold will be maintained at its current level of £40,000 for all other cars.
The change applies retrospectively, meaning that most vehicles registered from 1 April 2025 will not be required to pay the charge. Any vehicles taking out a second licence with effect before 1 April 2026 will be required to pay one year of the charge only.
A further legislative change also ensures that all vehicle licences which first have effect on or after 1 April 2026 are subject to the increased threshold, regardless of when the licence is applied for.
Detailed proposal
Operative date
The change will have effect from 1 April 2026.
Current law
The relevant VED ECS legislation is contained in the Vehicle Excise and Registration Act 1994 (VERA). Schedule 1, Part 1AA, Paragraph 1GE of the Vehicle and Excise Registration Act 1994 provides for the higher rate of duty that may apply to light passenger vehicles with a list price exceeding £40,000.
Proposed revisions
Primary legislation will be introduced, amending VERA 1994 to introduce a higher ECS threshold for light passenger zero-emission vehicles first registered on or after 1 April 2025, when applying for a licence which will first have effect on or after 1 April 2026 and is not a first vehicle licence. This is in addition to the current ECS threshold for all other eligible light passenger vehicles.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| — | -50 | -110 | -190 | -325 | -505 |
These figures are set out in Table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility (OBR). More details can be found in the policy costings document published alongside Budget 2025.
Macroeconomic impact
This measure is expected to have a small direct effect to reduce CPI.
In their November 2025 Economic and Fiscal Outlook, the Office for Budget Responsibility (OBR) estimated this measure to have a small negative effect on the level of CPI by 2030 to 2031.
Impact on individuals, households, and families
This measure will positively impact individuals who purchase or own an EV first registered from 1 April 2025 with a list price between £40,001 and £50,000 by reducing their VED liability, with increasing numbers being impacted in future years as the zero-emission vehicle population grows.
This measure is not expected to have an impact on family formation, stability, or breakdown.
Customer experience is expected to remain broadly the same as this measure does not make any changes to the operation of any tax processes.
Equalities impacts
An individual may be affected by this measure regardless of their protected characteristics. HMRC does not currently hold data on the protected characteristics of individuals impacted by this measure and so cannot make an assessment of the impacts on those with shared protected characteristics.
Administrative Impact on business including civil society organisations
This measure is expected to have a negligible impact on administrative costs for businesses and civil society organisations which own cars. Businesses and organisations which own impacted vehicles will see a reduction in VED liability, with the benefit increasing in future years as the zero-emission vehicle population grows.
One-off costs will include familiarisation with the rate change. There are not expected to be any continuing costs.
Customer experience is expected to remain broadly the same, as this measure does not make any changes to the operation of any tax processes.
Operational impact (£ million) (HMRC or other)
There will be negligible financial impact on operational costs for the Driver and Vehicle Licensing Agency (DVLA).
Other impacts
This measure has a behavioural impact by incentivising purchase of zero-emission vehicles to support the government’s wider objective of reducing greenhouse gas emissions to net zero by 2050.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through the DVLA vehicle licensing data, as well as through regular communication with relevant stakeholders across government and in industry.
Further advice
If you have any questions about this change, contact the Energy and Transport Taxes Team: ETTAnswers@HMTreasury.gov.uk.