New research from Dick Lovett has revealed how many drivers will benefit from new tax changes, saving £425 a year.
Electric vehicles used to be exempt from the luxury vehicle tax, however it was previously announced that any EVs priced £40,000 or more and registered after the 1st of April 2025 were subject to paying the additional £425 per year.
However, this limit has been increased to £50,000 meaning drivers with popular models priced between £40,000 and £50,000 will now avoid this extra charge.
Analysing UK vehicle registrations since April 1st 2025, motor group Dick Lovett has calculated that at least 475,836 drivers will benefit from this tax change, saving £425 a year – totalling £20,2230,300 across the country.
Drivers would have had to pay this tax for a five year period, starting from the second year of their car’s “life”, meaning drivers now exempt will save a total of £2,125 over five years.
Key findings:
1. 475,836 registered vehicles now exempt from luxury car tax
- Analysing the 116 EV models (across 23 ranges) that fall within £40,000 to £50,000, Dick Lovett found 475,836 registered vehicles are now excluded from the new luxury car tax.
- While some models within a range are now exempt, others remain above the tax threshold, making it important to check individual models rather than entire ranges.
- For example, drivers of the BYD Sealion 7 Comfort will now be exempt from the £425 yearly charge, with an on-road price of £46,990, while the other Sealion 7 models will still pay the fee.
- However, some entire ranges are now exempt from the tax. BMW’s iX1 and iX2 ranges now fall under the luxury car tax threshold when looking at standard specs.
2. Models now exempt, include:
- Audi Q4 e-tron (82,925 registered vehicles in Q2 & Q3 2025)
- BMW iX1and iX2 (46,017 registered vehicles)
- BYD Seal Design EV and Sealion 7 Comfort EV (7,216 registered vehicles)
- Cupra Tavascan (5,667 registered vehicles)
- Ford Capri (2,284 registered vehicles)
- Hyundai Ioniq 5 and Ioniq 6 (20,161 registered vehicles)
- Lexus RZ (2,209 registered vehicles)
- Mercedes-Benz CLA Electric and EQA (2,000 registered vehicles)
- MG IM6 Long Range (27 registered vehicles)
- Peugeot E-3008 and E-5008 (19,609 registered vehicles)
- Polestar 2 (44,347 registered vehicles)
- Skoda Enyaq (22,534 registered vehicles)
- Tesla Model 3 Premium, Model Y and Model Y Premium (211,125 registered vehicles)
3. Alex Lee, motoring expert at Dick Lovett offers comment for drivers looking at new EVs after this news:
“For anyone looking at a new EV, this tax change offers a welcome savings opportunity. For those looking at electric cars between £40,000 and £50,000, drivers can now expect to save £2,125 over five years.
“This also means that drivers will have more choice when it comes to mid-range EVs, and can add higher spec trims to these models without worrying about extra taxes being applied.
“For example, the MINI Countryman SE ALL4 models would already have been exempt from this luxury car tax, but buyers can now benefit by adding high spec configurations such as their Level 1 Pack (from £42,705) without triggering the additional tax on their car.
“However, with the changes in this tax, it’s important for drivers to look into the specific car they are wanting to get to avoid any confusion, as not all models will now be exempt. While BMW’s iX1 and iX2 ranges now fall under the luxury car tax threshold, the iX M60 models will not be exempt from the £425 per year charge.
“The tax is based on the list price of your vehicle at purchase, so be sure you’re not opting for trims that push you over the threshold without knowing. It’s always best to head into a dealership to chat through your options if you’re not sure on pricing.”
