Drivers warned of £425 extra car tax charge following major change

Daily Record

18 hours ago

Rachel Reeves announced changes to the Expensive Car Supplement earlier this year.
British drivers are being warned over car tax changes which could see them being hit with a £425 extra charge. Rachel Reeves, the Labour Party Chancellor, announced changes to the Expensive Car Supplement earlier this year.
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Drivers with vehicles worth over £40,000 are liable for the expensive car supplement, also known as the luxury car tax, which amounts to £425 annually from the second to the sixth year after registration. Electric cars were previously exempt from the levy; however, this was changed on April 1.
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The Society of Motor Manufacturers and Traders (SMMT) said the extra charges have created a "brake on demand" at a critical juncture for the car sector.
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SMMT reports new car demand stalled, with the market posting its weakest July since 2022 and more moderate EV growth compared with the recent trend, reports Birmingham Live.
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However, drivers keen to embrace eco-friendly motoring are being handed a £1,500 incentive through a government initiative aimed at slashing electric vehicle prices.
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The £650million Electric Car Grant (ECG) forms part of a broader £4.5billion governmental blueprint to tackle emissions, lower driving expenses and strengthen UK manufacturing.
Mike Hawes, chief executive of the SMMT, said: "July's dip shows yet again the new car market's sensitivity to external factors, and the pressing need for consumer certainty.
"Confirming which models qualify for the new EV grant, alongside compelling manufacturer discounts on a huge choice of exciting new vehicles, should send a strong signal to buyers that now is the time to switch."
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Jon Lawes, managing director at Novuna Vehicle Solutions, explained that the new EV grant for models under £37,000 is welcome, but its rushed rollout and limited industry consultation have "caused confusion".
He warned that manufacturers are "scrambling to work out which models apply while consumers are left in limbo, wondering if they'll get up to £3,750 in savings, risking a slowdown in demand, particularly in private sales, which continue to lag behind fleets".
Vicky Edmonds, CEO of EVA England, says: "We are delighted to see the first qualifying models announced for the Government's new Electric Car Grant.
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"Our members consistently identify high upfront costs as the biggest barrier to switching, and this support will give drivers the confidence to choose electric for their next new car purchase.
"With recent sales dipping as drivers waited for details of the grant, today's announcement provides a welcome boost for interest in electric vehicles.
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"This funding has the potential to make electric cars more affordable for those who buy new, but further demand-led policies that support drivers buying in the used EV market will be crucial in helping many other drivers to make the switch."
Sue Robinson, chief executive of the National Franchised Dealers Association, added: "We are disappointed to see a reversal of the gains made in June.
"Looking ahead, we are likely to see continued pressure on the new vehicle market, due to weak economic growth."