If I buy an electric car that's more than £40k, will I be liable for showroom tax from 2025?

If I buy an EV with list price £39500 and as an option have metallic paint at £555 will this make the car liable for the £40,000 'showroom tax' rate when EVs have to pay VED in a couple of years time?

Asked on 20 March 2023 by KNH

Answered by David Ross

Under the VED changes planned to come into effect in April 2025, EVs will no longer qualify for the zero rate, including the premium supplement for vehicles costing over £40,000 when new. We spoke to HM Treasury and a spokesperson told us that: “Anyone who buys a car which costs more than £40,000 must pay an additional supplement on top of the standard rate of Vehicle Excise Duty for five years. The list price includes the price of any non-standard accessory.” The list price of a vehicle includes the manufacturers recommended retail price, the price of any non-standard accessories fitted by the manufacturer, VAT, delivery charges and pre-delivery inspection charges.

The good news is that the HM Treasury confirmed that this will only apply to EVs registered from April 2025 onwards. So if you buy now, you won't be retrospectively taxed or have to pay more from 2025.

Tags: car tax electric cars ved

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