Starting April 2025, electric vehicle (EV) owners will face increased costs as the government removes car tax exemptions. Existing EVs will now be subject to the standard Vehicle Excise Duty (VED) of £195 per year—previously set at zero.
However, the biggest financial hit is reserved for buyers of new EVs with a retail price over £40,000. These vehicles will be subject to the Expensive Car Supplement (ECS), which will rise to £425 per year for five years—adding up to £2,125.
This additional tax has been nicknamed the "Tesla tax" due to the high price of many EVs. However, several high-quality EVs remain under the £40,000 threshold, helping buyers avoid the surcharge. We've picked the best EVs in six key segments that keep costs low while offering great value.
Best Electric City Car Under £40K: Hyundai Inster
Price from: £22,715
Range: Up to 229 miles
The compact Hyundai Inster offers an impressive interior space despite its small footprint. It comes in two versions: the Standard Range (186 miles) and the Long Range (229 miles), both comfortably below the ECS limit.
Best Electric Supermini Under £40K: Renault 5 E-Tech
Price from: £22,995
Range: Up to 250 miles
A modern take on the classic Renault 5, the new E-Tech combines nostalgic styling with modern EV technology. With a driving range of 190 to 250 miles, it provides solid value compared to petrol alternatives.
Best Electric Family Hatchback Under £40K: MG4 EV
Price from: £26,995
Range: Up to 323 miles
MG’s electric hatchback is significantly cheaper than competitors like the VW ID.3 (£30,850) while offering a competitive range of 270 to 323 miles.
Best Electric Compact SUV Under £40K: Kia EV3
Price from: £32,995
Range: Up to 375 miles
Kia’s EV3 comes in two sub-£40K trims (Air and GT-Line). The GT-Line offers a long-range 81.4kWh battery capable of 375 miles on a single charge.
Best Electric Executive Car Under £40K: Tesla Model 3
Price from: £39,990
Range: 344 miles
Tesla’s Model 3 just slips under the £40,000 mark—though adding optional extras pushes it over. The facelifted 2024 version boasts an improved range of 344 miles.
Best Electric Large Family Car Under £40K: Skoda Enyaq
Price from: £39,000
Range: 269 miles
For families seeking a spacious EV, the Enyaq SE-L trim avoids the ECS surcharge. A recent facelift has improved its design, and it comes well-equipped as standard.
Conclusion
With the ECS surcharge set to rise, more manufacturers are adjusting their pricing to keep EVs under the £40,000 threshold. These six models offer excellent range, practicality, and affordability—helping buyers avoid extra tax while still enjoying the benefits of electric driving.
