The six greatest EVs that dodge Rachel Reeves’ electrical automotive tax raid from April – saving patrons over £2,000

Electric vehicle owners are set to face higher costs from next month when the Government scraps exemption from car tax.

On 1 April, existing EV owners will be hit with a standard rate of vehicle excise duty (VED) – more commonly referred to as car tax – just like petrol and diesel cars as the Chancellor rings in a ‘fairer tax system’. 

This will see most current EV drivers’ annual car tax bill rise from zero to £195 from next month.

However, the Chancellor’s sting on electric cars is far more significant for buyers of new vehicles the Government deem ‘expensive’.

Under the new rules coming into force in a matter of days, any new EV purchased from 1 April 2025 with a recommended retail price (RRP) of £40,000 or more will be stung with the additional ‘expensive car supplement’ (ECS), which is set to rise to £425 per year for a five year period – a whopping £2,125 in total.

Despite EVs typically being pricier than their fossil-fuelled equivalents and often costing far more than the ECS threshold, there are some quality EVs that easily slip just below the £40,000 mark – from compact city cars to large family SUVs.

The supplement has been dubbed a ‘Tesla tax’ by EV owners and industry insiders, given that new cars sold by the popular US maker typically exceed the £40,000 threshold. But not all of them…

We pick our favourite models in each important car segment – all of them priced below the ECS ceiling – that will save buyers over £2,000 in ownership costs.

Market analysis suggests that drivers buying new EVs rather than a petrol or diesel car will be three times more likely to be hit by the ECS luxury car tax.

Experts say its introduction threatens to ‘derail the nation’s transition to greener motoring’ in the face of already limited appetite among private car buyers.

These changes to VED were initially announced in November 2022 under the Conservative government by then-chancellor Jeremy Hunt, who said he wanted to ‘make our motoring tax system fairer’.

And despite an industry-wide backlash, the policy will be continued by the Labour Government and put into place for all new purchases from 1 April 2025.

The DVLA confirms: ‘New electric and zero emission vehicles registered on or after 1 April 2025 with the list price exceeding £40,000 will attract the standard rate, plus the expensive car supplement for the first 5 years from the start of the second licence.’

The ECS is payable on on top of the standard VED rate of £195 paid from the second year following registration.

With the expensive car supplement due to jump to £425 from 1 April, the annual VED outlay from the second year of ownership will be an eye-watering £620.

Car manufacturers have already been reacting to the new rules by trimming the RRPs of their EVs so that they slip just below the £40k threshold. 

But others comfortably sit under that price ceiling already.

We’ve picked our favourite EVs from six of the most popular car segments, from small city runaround to large family SUVs:

Best electric city car under £40k: Hyundai Inster 

Price from: £22,715

Versions under £40k: all

Range: up to 229 miles

The smallest class of passenger car – the A-segment or ‘city cars’ – already has a wider choice of EVs than petrol equivalents.

This includes the Dacia Spring, Britain’s cheapest new electric car from £14,995, as well as other newcomers such as the Leapmotor T03 and the just-arrived Citroen e-C3.

But our pick of the bunch is Hyundai’s new Inster.

Despite its ultra-compact proportions, it has a Tardis-like interior with lots of room.

It will initially be available in the UK in two guises later this year: the entry Standard Range with a 42kWh battery, 71kW electric motor and range of 186 miles and Long Range with a larger 49kWh battery pack, more potent 86kW e-motor and 229 miles of full-charge driving.

Best electric supermini under £40k: Renault 5 E-Tech

Price from: £22,995

Versions under £40k: all

Range: up to 250 miles 

Renault has managed to achieve something every other rival has failed to do in recent years; rekindle an iconic name for an electric car and still managing to do it justice.

The new 5 E-Tech, which is a reborn version of the legendary 1980 model with battery power, has been a huge success for the French manufacturer.

With impressive driving characteristics, a premium feel to the cabin and a more than adequate range of between 190 to 250 miles, it ticks all the right boxes for a small car.

While the starting price of £23,000 is far from cheap, comparatively speaking it works out at pretty good value. It also works out the same as a mid-spec petrol Vauxhall Corsa, which is case in point for how pricey new models are in 2025.

The 5 E-Tech has wowed the motor industry so much that it recently picked up the illustrious European Car of the Year gong.

MailOnline and This is Money has been fortunate enough to drive the 5 on three separate occasions and have been bowled over by its charm and character. 

Best electric family hatchback under £40k: MG4 EV 

Price from: £26,995

Versions under £40k: all

Range: up to 323 miles

Now owned by Chinese giant SAIC, MG has taken on a new lease of life.

While the brand retains some of its classic heritage, the focus now is on affordable electric cars that undercut most rivals from Europe, Japan and Korea.

The MG4 is a prime example of this. 

Priced from just under £27,000, it’s far easier on the purse strings than a VW ID.3 (from £30,850) or a Cupra Born (from £35,495).

The cabin feels grown up, the range of between 270 to 323 miles is more than enough for almost all UK driving scenarios, and it also looks pretty good.

It’s the reason this is the best-selling sub-£40,000 model in the UK for two years running. 

Best electric compact SUV under £40k: Kia EV3 

Price from: £32,995

Versions under £40k: EV3 Air and EV3 GT-Line 

Range: up to 375 miles

Of all the mainstream car makers, Kia is arguably among those at the top of the list in terms of capturing the EV market.

And its latest – and smallest – model, the new EV3, looks set to steal a march on rivals in one of the most competitive car markets at the moment.

With every brand on the planet seemingly offering a compact SUV, Kia’s EV3 is our choice of the bunch with exclusively battery power.

The entry and mid-spec versions – Air and GT-Line respectively – both sit under the £40,000 ECS threshold, though the range-topping GT-Line S trims sit frustratingly just above the £495-a-year premium tax ceiling.

Under its boxy body is the choice of two battery sizes: 58.3kWh or 81.4kWh. While the entry version has a range of up to 254 miles, the sub-ECS variant with the longest range is the £39,495 GT-Line powered by the Long Range 81.4kWh battery providing up to 375 miles on a single charge. 

Best electric executive car under £40k: Tesla Model 3 

Price from: £39,990

Versions under £40k: Model 3 Rear Wheel Drive

Range: 344 miles

Describing the ECS as a ‘Tesla tax’ on EVs isn’t quite accurate; that’s because there is a Tesla that costs less than £40,000…just.

The entry-spec Model 3 Rear Wheel Drive just slips under the threshold at £39,990 – but you cannot add a single option to it, else feel the wrath of the Chancellor’s premium tax hike.

Luckily, in standard trim, the Model 3 is still a mightily impressive vehicle, especially having been significantly updated from the start of 2024 with a new facelifted version with sharper looks.

This svelte design and new wheels have contributed to a longer range across the Model 3 line-up.

For the entry version, the official combine range of 344 miles is a 39-mile improvement on the pre-facelift Model 3 and means owners can – in theory – drive from London to Newcastle with plenty of charge remaining in the battery.

Best electric large family car under £40k: Skoda Enyaq

Price from: £39,000

Versions under £40k: SE-L 

Range: 269 miles

If you want to avoid Chinese newcomer brands, there really is very little choice in terms of large family EVs for less than the £40,000 ECS limit. 

But Skoda’s entry Enyaq SUV in SE-L trim just slips under the threshold by £1,000.

Fresh from a facelift, Skoda’s largest EV looks more stylish than before. 

An outlay of £39,000 buys you an incredibly spacious five-seat family wagon with a large boot and a 59kWh battery offering single-charge journeys of 269 miles before you need to pull over for a fresh sip of electricity.

The Enyaq comes well equipped as standard, meaning you don’t miss out on tech and comfort features despite your efforts to evade the £495-a-year expensive car supplement.