UK car tax from April 2026: the £50,000 'luxury car' limit for EVs, and which Teslas now escape it

From today, April 1, 2026, the UK's "expensive car supplement" kicks in at a higher price for electric cars. The threshold rises from £40,000 to £50,000, which takes several Tesla versions out of the extra charge. Here is what changes, which Teslas are affected and what you will pay in the new tax year.

What changes today

Since April 2025, electric cars in the UK pay vehicle excise duty (VED) like petrol and diesel cars. That includes the expensive car supplement, an extra yearly charge for cars with a list price above a set limit. It applies from the second year a car is taxed, for five years.

The government announced at the November 2025 Budget that the limit for zero-emission cars would rise to £50,000. According to the official policy paper, the change:

• applies to tax payments that start on or after April 1, 2026, other than a car's very first licence;
• covers zero-emission cars first registered on or after April 1, 2025;
• means electric cars with a list price above £40,000 and up to £50,000 no longer pay the supplement;
• leaves the £40,000 limit in place for petrol, diesel and hybrid cars.

Electric cars registered before April 1, 2025 never had to pay the supplement, and still don't.

The 2026/27 rates

• First year, electric car: £10.
• Standard rate from year two: £200 a year, up from £195.
• Expensive car supplement: £440 a year, up from £425, on top of the standard rate in years two to six.

So an electric car above the limit pays £640 a year in years two to six. A car between £40,000 and £50,000 now pays £200, saving £440 a year at current rates, or up to £2,200 over the five years the supplement would have applied.

Which Teslas are under £50,000?

Using the UK list prices Tesla announced for its current line-up in December 2025 and January 2026:

• Model 3 Standard, £37,990: was already below £40,000, so no change.
• Model 3 Premium Long Range RWD, £44,990: now below the limit.
• Model Y Standard, £41,990: now below the limit.
• Model Y Premium Long Range RWD, £48,990: below the limit, but only just.
• Model Y Premium Long Range AWD, £51,990, and Model Y Performance, £61,990: still above it, so the supplement still applies.

Prices change, so check the figures for your own car. Two rules matter. First, the list price is the published price before any discounts, so a lower deal price does not bring a car under the limit. Second, it includes factory options. A paint colour, bigger wheels or another interior can push a Model Y Long Range RWD over £50,000.

What it means for owners and buyers

• If you bought a Tesla from April 2025: check the original list price on your order confirmation or invoice. If it was between £40,000 and £50,000, your renewal from today should be £200, not £640.
• If you renewed early: the policy paper says cars whose second licence started before April 1, 2026 pay one year of the supplement.
• If you are buying used: the registration date and the car's original list price decide whether the supplement applies, not what you pay for it.

Why it matters

The Treasury expects the change to cost about £50 million in 2026/27, rising to around £505 million a year by 2030/31. For Tesla, it matters because several core UK versions of the Model 3 and Model Y sit between £40,000 and £50,000. For their owners, the yearly tax bill from year two drops by more than two thirds. Pricier versions, such as the Model Y Performance, still pay the full £640.

What to watch next

• Tesla's pricing: whether Tesla tunes versions or options to stay under £50,000.
• Future Budgets: the threshold and rates can change again each year.