Rachel Reeves blasted as £425 car tax ‘indifferent | Tech News
Rachel Reeves £425 car tax charge is totally “detached from reality”, according to a leading motoring expert. Shahzad Sheikh, founder and presenter of the YouTube channel @BrownCarGuy, blasted the Chancellor over the UK’s Expensive Car Supplement (ECS) charge, with many “ordinary” cars now affected.
The ECS luxury car tax is an additional £425 annual tax rate applied to vehicles registered after 2017 with a list price over £40,000. The charges are added between the second and sixth years of registration and are paid on top of the standard Vehicle Excise Duty (VED) rate, now £195 per annum. The charge was introduced to collect extra fees from more expensive vehicles, which tended to emit more pollution. Electric cars were completely exempt from the fees until 2025, when charges were introduced, with the high cost of brand-new EVs pushing many over the threshold.
Speaking on his YouTube channel, Shahzad said: “There’s an important change to that threshold for the luxury car tax. Until now, the luxury car tax kicked in at £40,000 plus, so any car over £40,000.
“Many people myself included, pointed out had become completely detached from reality. We live in an era now that Britain’s best-selling car, the Ford Puma, starts at £26,500, so cars are expensive now. Plenty of perfectly very ordinary electric cars now sell past the £40,000 bracket without being remotely luxuries.”
After widespread criticism, the Government is set to raise the ECS luxury car tax threshold for electric vehicles to £50,000 from April 1, 2026. However, like other VED charges, the annual ECS fee is set to rise with inflation as bills jump from £425 to £440 per annum.
Shahzad said: “From April 1 2026, the threshold for electric cars has been increased to £50,000, and that applies to any car registered after April 1, 2025. However, this change does not apply to petrol and diesel cars. Their threshold remains firmly stuck at £40,000.”
HM Revenue and Customs (HMRC) defined the change in thresholds would “positively impact individuals” who buy or own an EV first registered from April 2025.
It careworn that the measure is more likely to price the Exchequer £50million in misplaced income between 2026 and 2027, with £110million misplaced between 2027/28.
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