Almost half a million car owners have been hit by the Government’s ‘luxury car tax’ in the past year, new analysis by Marshall Motor Group reveals.

A Freedom of Information (FOI) request to the DVLA uncovered that more than 426,000 vehicles were subject to the Expensive Car Supplement (ECS) in 2024/25.

The research helps to highlight the scale of an issue that has now prompted the Chancellor to raise the ‘luxury car tax’ threshold for electric vehicles to £50,000 from April 2026.

The FOI data from the DVLA shows that the number of fuel, electric and hybrid-based vehicles paying the ECS rose from 299,553 in the 2022/23 financial year to 426,758 in 2024/25 – a 42% increase in just two years.

The £40,000 threshold, introduced in 2017, was originally devised to only target high-end, premium vehicles. But the new FOI data reveals that the supplement has increasingly affected buyers of popular, everyday cars.

The rising adoption of hybrid and electric vehicles, and the cost of improved safety tech, mean more cars than ever before sit above the £40,000 price point when new.

In April 2025, new EVs became liable for Vehicle Excise Duty for the first time, including the annual £425 Expensive Car Supplement, which applies from year two of ownership.

The FOI data has revealed that 119,203 EVs costing £40,000 or more were registered between April and September 2025 – generating over £50m a year in ECS revenue for the Government.

From April 2026, the luxury car tax threshold for EVs will rise from £40,000 to £50,000, while the thresholds for petrol, diesel and hybrid models remain unchanged at £40,000.

Ben Welham, motoring expert at Marshall Motor Group, said: “The FOI data shows just how many modern cars have ended up above the £40,000 threshold. These are vehicles that many drivers wouldn’t consider ‘expensive’ by today’s standards. The threshold rise to £50,000 for EVs is a sensible update and reflects how pricing has evolved since 2017.”

But the data also shows that hybrids “bear the brunt” for the ECS as these models remain the most common fuel type in the luxury tax bracket. The number of hybrids subject to the supplement has more than doubled in two years, from 116,568 in 2022/23 to 247,613 in 2024/25.

The FOI data shows the supplement increasingly applies to mainstream, family cars rather than traditional ‘prestige’ models.

“Hybrids are increasingly common and have become the go-to choice for families who want fuel efficiency without going fully electric,” added Welham. “But a hybrid SUV can easily tip over £40,000 when it’s equipped with the safety and tech features many buyers expect today.

“Many of these are modern, practical family cars caught in tax bracket intended for cars with a more premium feel.”

Meanwhile, diesel-powered vehicles in the bracket have fallen from 68,488 in 2022/23 to 31,091 in 2025/26, reflecting the national decline in diesel sales as drivers shift towards electrified powertrains.

Marshall Motor Group said the £10,000 threshold increase reflects market reality for EVs.

With many electric models now priced between £40,000 and £50,000, the updated threshold brings the rules more in line with current market reality and removes thousands of EVs from being regarded as luxury vehicles.

“Removing this supplement for mid-range models will make the transition to electric more accessible for drivers who’ve been put off by the tax implications,” added Welham. “That’s good for drivers and good for the government’s electrification targets.”

He added: “It also recognises that electric vehicle pricing is different. Battery costs mean a mid-spec electric family SUV will naturally sit slightly higher than its petrol equivalent, but that doesn’t make it a luxury purchase.

“EVs still offer much lower running costs than petrol or diesel equivalents, particularly where home charging is available. Charging at home can cost as little as 2p per mile, compared to fuel costs of around 15p per mile for a typical petrol or diesel SUV.”