If your car’s list price is over £40,000, you pay an extra £440 a year on top of standard Vehicle Excise Duty. This charge is called the Expensive Car Supplement. It starts from your second tax payment and runs for five years, so it covers years two through six of the vehicle’s life. The threshold is the manufacturer’s published list price on the day before first registration, not the amount you actually paid at the dealership.
What Counts Toward the £40,000
The list price is the manufacturer’s recommended retail price the day before the car is first registered, and it is fixed for the life of the vehicle. Discounts, dealer incentives, and the second-hand value later on make no difference. If the published figure was above £40,000, the supplement applies.
The list price includes VAT, the manufacturer’s delivery charge, pre-delivery inspection costs, and any options fitted by the manufacturer before registration.1GOV.UK. Changes to Vehicle Tax From April 2017 – Webinar Q&A It does not include the first registration fee or accessories fitted by the dealer after manufacture. Modifications for disabled users are also excluded.
This is where buyers get caught. A car with a base price of £37,000 can cross £40,000 once you add premium paint, upgraded wheels, or a technology package at the factory. Every option ticked on the order form before registration counts. If you are sitting close to the boundary, ask whether specific extras can be fitted by the dealer after registration instead, because dealer-fitted accessories do not count toward the list price.
How Much You Pay and When
For the 2026/27 tax year, the Expensive Car Supplement is £440 a year.2GOV.UK. Vehicle Tax Rates V149 and V149/1 It sits on top of the standard flat rate that every car pays from year two onward. If the standard rate is £200, your annual bill becomes £640 for each year the supplement applies. Rates are usually revised each April, so check the current figure when your renewal is due.3GOV.UK. Administrative Amendment to Vehicle Excise Duty Expensive Car Supplement
The supplement does not apply in the first year. In year one you pay only the first-year VED rate, which is based on CO2 emissions. The supplement then kicks in when you tax the car for the second time and runs for five consecutive years, covering years two through six of the vehicle’s life.4GOV.UK. Vehicle Tax for Electric, Zero and Low Emission Vehicles Once year six ends, the supplement drops away and you go back to the standard flat rate. Across those five years, the supplement alone adds over £2,000 to your ownership costs at today’s rate.
Electric Cars Use a £50,000 Threshold
The £40,000 trigger applies to petrol, diesel, and hybrid vehicles. For zero-emission vehicles the threshold is higher: the supplement only applies if the list price is above £50,000. This higher threshold took effect from 1 April 2026 and also applies retrospectively to electric cars first registered on or after 1 April 2025.4GOV.UK. Vehicle Tax for Electric, Zero and Low Emission Vehicles Before April 2025, fully electric and hydrogen fuel cell vehicles were exempt from VED entirely; that exemption has ended, and EVs now pay VED like any other car.
The practical effect is real. An electric car with a list price of £47,000 avoids the supplement, while a petrol car at the same price triggers five years of extra charges.
Buying a Used Car Within the Five-Year Window
If you buy a used car that is still within its supplement years, you inherit the remaining obligation. A three-year-old car with a qualifying list price still faces roughly three more years at the higher rate. The clock runs from the original registration date, not from when you bought it. Before buying, check the registration date and the original list price so you know how many supplement years are left.
How You Pay Affects the Total
You can pay VED annually, every six months, or monthly by Direct Debit. Annual payment has no added cost. Both the six-month and monthly options carry a 5% surcharge.5GOV.UK. Vehicle Tax Direct Debit Payments – Set Up a Direct Debit On a total annual bill of £640, paying monthly costs an extra £32 over the year. If you can pay in one go, that is the cheapest route while the supplement applies.
Who Is Exempt
The main exemption applies to vehicles used by disabled people who receive certain mobility benefits. The vehicle must be used by or solely for the benefit of someone receiving one of the following qualifying awards:
- Higher rate mobility component of Disability Living Allowance (DLA)
- Enhanced rate mobility component of Personal Independence Payment (PIP)
- Armed Forces Independence Payment (AFIP)
- War Pensioners’ Mobility Supplement (WPMS)
The vehicle must be registered in the disabled person’s name or their nominated driver’s name, and it must be used for the disabled person’s needs rather than the driver’s own purposes.6GOV.UK. Financial Help If You’re Disabled – Vehicles and Transport If the qualifying benefit stops, the vehicle must be taxed at the normal rate, including the supplement if applicable.7GOV.UK. How to Apply for Free Disabled Tax
What Happens If You Don’t Pay
Failing to tax your vehicle triggers an automatic DVLA enforcement process. You get a late licensing penalty of £80, reduced to £40 if you pay within 33 days.8GOV.UK. DVLA Enforcement of Vehicle Tax, Registration and Insurance Offences If you drive or keep the car on a public road untaxed, the DVLA can issue an out-of-court settlement of £30 plus one and a half times the outstanding tax. Unpaid cases can go to a magistrates’ court, where the penalty rises to £1,000 or five times the outstanding tax, whichever is greater.
Your vehicle can also be clamped, with a £100 release fee payable within 24 hours. If it is towed to a pound, the impound release fee is £200 plus £21 per day in storage.8GOV.UK. DVLA Enforcement of Vehicle Tax, Registration and Insurance Offences If you are not using the car and want to stop paying VED, declare it off the road with a Statutory Off Road Notification (SORN). Keeping an untaxed car without a SORN is itself an offence and carries the same penalty structure.