Full list of 23 'luxury' cars that now avoid April 2026 'tax trap'

Drivers purchasing electric vehicles are set to benefit from a substantial tax relief after the Government increased the "luxury car tax" threshold by 25%.

The Expensive Car Supplement threshold has been raised from £40,000 to £50,000 for zero-emission vehicles. This shift means a whole range of models that previously attracted the charge will now be exempt. Under previous regulations, motorists buying cars priced above £40,000 were hit with an additional £425 annually for five years on top of standard vehicle excise duty – amounting to a total of £2,125.

However, electric vehicles costing under £50,000 and registered from 2025 onwards will avoid the surcharge entirely, substantially cutting ownership costs for numerous buyers. The incentive for EVs arrives amid a surge in consumers looking to make the switch to battery-powered vehicles, driven by the Middle East energy crisis that has inflated petrol and diesel prices.

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Research by car marketplace Carwow reveals at least 23 electric models – priced between £40,000 and £50,000 – will now sit below the luxury car tax threshold.

These encompass a variety of premium SUVs, saloons and family vehicles from leading manufacturers.

EVs now sidestepping the £425-a-year surcharge

Audi Q4 e-tron
Audi Q4 Sportback e-tron
BMW iX1
BMW iX2
BYD Seal
BYD Sealion 7
Cupra Tavascan
Ford Capri
Hyundai Ioniq 5
Hyundai Ioniq 6
Kia EV4 Fastback
Lexus RZ
Mercedes-Benz CLA Electric
Mercedes-Benz EQA
Mercedes-Benz GLB Electric
MG IM6
Peugeot E-3008
Peugeot E-5008
Polestar 2
Skoda Enyaq Coupe
Tesla Model 3 (Premium)
Tesla Model Y
Tesla Model Y (Premium)

This adjustment means motorists can now choose better-specced versions of these vehicles without automatically triggering the surcharge. That said, eligibility hinges on the final purchase price – factoring in trim levels, battery upgrades and any optional extras. Any variant topping £50,000 will still attract the levy.

Siobhan Doyle, Consumer Writer at Carwow, said: "With more EVs now falling below the tax threshold, drivers have a wider choice of models that combine strong value with lower ownership costs.

"However, it's important to note that the expensive car supplement is implemented based on the purchase price of the car, meaning that not all versions of a model will necessarily be eligible. For example, if you go for a higher-specification trim, bigger battery, or simply pile on the optional extras, you could be charged extra if the car's value exceeds £50,000."

Industry experts suggest the policy change broadens options within the mid-market EV segment, where numerous sought-after models had previously been snared just beyond the old £40,000 threshold. Carwow also spotlighted several models it reckons are worth considering under the revised regulations.

Discussing the Hyundai Ioniq 5, Ms Doyle said: "The Ioniq 5's design is eye-catching, and its interior is spacious and nicely finished. While some alternatives may offer longer range or larger boots, if you want an EV which is roomy, practical, thoughtfully designed, and stylish enough to turn heads, the Hyundai Ioniq 5 is an excellent choice."

Turning to the Mercedes CLA Electric, she said: "The Mercedes CLA Electric is a handsome little thing and absolutely packed with clever tech. It's great to drive and has one of the longest ranges of any EV on sale in the UK."

Regarding the Polestar 2, she said: "This stylish electric hatchback offers sleek design, agile handling, and engaging performance... build quality is excellent, and range is solid, making it a strong contender on any EV shortlist."

For those shopping with families in mind, she drew attention to the Skoda Enyaq: "This electric SUV from Skoda is a fantastic all-rounder, with a spacious cabin, huge boot, and comfy suspension paired with good range."

Finally, assessing the Tesla Model 3 Premium, she observed: "It offers a claimed range of up to 436 miles and centres around a large 15.4-inch touchscreen that controls nearly everything – slick, but not instantly intuitive."

This development arrives as Government officials push forward with plans to boost electric vehicle adoption while managing declining subsidies and climbing purchase prices for drivers.