How the 2026 Expensive Car Supplement Changes Can Save EV Drivers Money

One of the more sensible policy shifts heading into 2026 is the increase in the Expensive Car Supplement (ECS) threshold for electric vehicles. It won’t grab headlines, but for drivers and SMEs it materially improves the economics of leasing an EV.

Originally, electric cars were exempt from the luxury car VED supplement. That changed in April 2025, when EVs with a list price above £40,000 were brought into scope. The timing was awkward. EV prices remain structurally higher than petrol and diesel equivalents, and the average new electric car now sits around £48,000. In other words, the tax net was catching exactly the cars government policy says we should be buying.

The November Budget corrected that imbalance. From April 2026, the EV threshold rises to £50,000, and crucially, the change applies retrospectively to cars registered from 1 April 2025. That means a significant proportion of mainstream EVs are now back out of ECS territory altogether.

What models will be affected by this change?

In practical terms, the higher £50,000 threshold brings a long list of genuinely mainstream EVs back out of Expensive Car Supplement territory. These aren’t just random cars, either. They are some of the most common EVs we see across the market. These include:

• Tesla Model 3 (from ~£39,990 to mid-£40,000s depending on trim)

• BMW i4 (from ~£46,000)

• Volkswagen ID.4 (from ~£40,000)

• Audi Q4 e-tron (from ~£45,000)

• Polestar 2 (from ~£45,000)

• Tesla Model Y (from ~£44,000)
  

Seen together, this is the heart of the UK EV market. By lifting the ECS threshold, the government has removed an artificial penalty from exactly the vehicles most drivers and SMEs are choosing, quietly making the right cars cheaper to lease, own and run.

A win for future EV drivers

For leasing, this matters. The Expensive Car Supplement adds £410 per year for five years. Remove it, and monthly costs come down immediately. Not dramatically, but certainly meaningful. Enough to tip the balance on affordability, scheme uptake and fleet viability.

The Budget also quietly improved day-to-day running costs through a change to the Advisory Electricity Rate, which dropped to 8p per mile. For drivers claiming business mileage, that brings reimbursement closer to real-world charging costs, particularly for those charging at home or on off-peak tariffs. It’s a small number, but over thousands of miles it reinforces the same message as the ECS change: EVs should be easier, not harder, to run.

This adjustment also better reflects market reality. Under the ZEV Mandate, EVs were expected to make up 28% of new car registrations in 2025. They’re currently closer to 26.4%. Adding friction through tax was never going to close that gap.

The conclusion is simple. A higher threshold makes EV leasing easier, cheaper and more logical at exactly the moment the market needs momentum. P+B wholeheartedly support the decision to fix something that didn’t make sense in the first place.