At £69,910, the Polestar 3 is liable for the Luxury Car tax
The Government is under pressure to clarify plans for the April 2025 luxury car tax, as thousands of electric vehicles (EVs) will be affected by it from April 2026. All cars, including EVs, priced over £40,000 will become subject to the £425 annual vehicle excise duty (VED) surcharge from their second year to their sixth year – adding up to almost £1300 over a typical four-year lease.
Currently, around 64% of EVs on the market exceed the £40,000 mark
Although the Government previously acknowledged the ‘disproportionate impact’ of the tax on zero-emission vehicles, no changes were announced in the latest Spring Statement. A letter from transport minister Lilian Greenwood confirms that the threshold remains under review, but no update has been provided.
At around £30,000 starting price, the Toyota Urban Cruiser avoids the Luxury car Tax
Trade bodies including the AFP, BVRLA and SMMT have urged the Government to act, arguing the tax now penalises those switching to cleaner transport. c, the value includes any optional extras and is based on the manufacturer’s list price, not the price paid for the vehicle.
Those interested parties are awaiting a response from the Treasury.