Drivers face £2,125 car tax rise which '67 per cent will have to pay'

Rachel Reeves is set to slap drivers with £2k car tax increases over the next year - with three in five motorists impacted. Under the new Labour Party government, drivers and motorists could face £2,000 hikes in car tax, it is warned.

Electric car drivers have been warned they face a new £2,125 luxury vehicle tax from April next year. The additional levy, known as the expensive car supplement, will apply to all electric vehicles priced above £40,000, in a cruel Cost of Living blow.

The £425 annual surcharge must be paid between the second and sixth years of a car's lifespan, totalling £2,125 over the period. Auto Trader figures revealed that 67 per cent of electric vehicles exceed the £40,000 threshold.

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Steve Brown of tax firm RSM explained that the introduction of higher taxes on electric car purchases “may well be counter-productive" and “appears at odds” with the Government's ambitious plans to reduce the country's carbon emissions."

A Treasury spokesman told The Telegraph newspaper in the wake of the findings: "From April 2025, electric cars will begin to pay VED in a similar way to petrol and diesel cars, ending the exemption for electric cars from the expensive car supplement." He added that zero-emission cars already come with premium price tags, and "some may feel they are paying a penalty for trying to do the right thing."

Auto Trader's Ian Plummer said in a statement: “The changes to VED promoting lower emission vehicles in the recent Budget announcement is exactly the kind of government action we need to see more of, so it's a shame, when we're aiming for a fair and equal transition, the expensive car supplement hasn't seen such treatment."

It comes after Sir Keir Starmer's government acknowledged the levy will have a "disproportionate impact" on electric car buyers from April.