Updated September 2026
What is the luxury car tax supplement?
The short answer
It is an extra £440 a year on top of standard vehicle tax, charged on cars with a list price over £40,000 — or over £50,000 for an electric vehicle — and payable for five years from the second time the vehicle is taxed. It attaches to the car, not to what you paid, so second-hand buyers inherit whatever is left of it.
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Officially it is the additional rate of vehicle excise duty. Everyone calls it the luxury car tax, and it produces more unpleasant surprises for used-car buyers than any other part of the tax system, for one reason: it is priced on what the car cost new, not what it costs now.
Buy a five-year-old executive saloon for £14,000 and you can still be paying a supplement calculated on a £45,000 list price.
The rule
GOV.UK states that you have to pay an extra £440 a year if you have a car or motorhome with a list price of more than £40,000, and that you only pay this rate for five years, from the second time the vehicle is taxed.
The threshold is higher for electric vehicles, at more than £50,000. GOV.UK also states that you do not have to pay it if you have a zero-emission vehicle registered before 1 April 2025 — but zero-emission vehicles registered between 1 April 2025 and 31 March 2026 are subject to it.
The supplement sits on top of the standard rate, which GOV.UK currently gives as £200 for a single 12-month payment or £210 if paid monthly by Direct Debit. So a car caught by the supplement pays that standard rate plus the additional rate for each of the five applicable years.
| Item | Detail |
|---|---|
| Amount | £440 a year on top of the standard rate |
| Threshold, petrol/diesel/hybrid | List price over £40,000 |
| Threshold, electric | List price over £50,000 |
| Duration | 5 years, from the second time the vehicle is taxed |
| Basis | Original list price, not the price you paid |
| Zero-emission exemption | Registered before 1 April 2025 |
| Zero-emission caught | Registered 1 April 2025 to 31 March 2026 |
Source: GOV.UK vehicle tax rate tables, checked August 2026. Rates and thresholds are set by government and change at fiscal events — confirm the current figures on GOV.UK before budgeting.
Why it is 'list price', and why that catches people
List price means the published price of the car when new, including options and delivery, before any discount you or the original buyer negotiated. That is a deliberate design choice: it stops the charge being avoided by discounting.
It also means a car can be over the threshold on paper without ever having sold for that much, and that optional extras can push an apparently sub-£40,000 car over the line. Two identical-looking cars from the same year can therefore be on different tax bills because one was specified more heavily.
The five-year clock runs from the second time the vehicle is taxed — in other words, from the start of the second tax year, after the first-year CO2-based rate has been paid. So the supplement typically applies through years two to six of the car's life, which is precisely the period when it is being sold second-hand.
Buying second-hand: how to avoid the surprise
The supplement follows the vehicle. Nothing about a change of keeper resets, reduces or removes it, and there is no mechanism to appeal it on the grounds that you paid far less than the list price.
So before you buy anything that was expensive when new — an executive saloon, a large SUV, a well-specified estate, a premium electric car — establish two things: the original list price with options, and the date of first registration. Together those tell you whether the supplement applies and how many years are left.
The date of first registration is free to look up in the DVLA vehicle record. List price is harder, because it depends on the original specification; the seller's original invoice or order form is the reliable source, and a car being sold without it is a car where you should assume the worse case.
The good news is that the charge ends. A car that has passed the six-year point drops back to the standard rate, which is why running costs on this class of car improve noticeably at that age.
What it is not
It is not related to the car's emissions beyond the first year, and not related to its current value. A high-emission cheap car can escape it entirely while a low-emission expensive one is caught.
It is not a one-off charge. It is annual, for five years, and it is collected as part of the ordinary vehicle tax payment rather than separately.
And it is not the same as the first-year rate, which is the separate CO2-based charge levied when the car is first registered — that runs from £10 for a zero-emission vehicle up to £5,690 for a car over 255g/km, and is usually rolled into the on-the-road price by the dealer.
Checking a specific car
Our free car tax check returns the DVLA record for any registration: current tax status, the tax due date, the month of first registration, CO2 emissions, Euro status, engine capacity and fuel type. The registration date is what tells you where the five-year clock stands.
For the amount itself, our car tax calculator works from the same registration, and GOV.UK's rate tables are the authoritative source for the figures.
We do not hold original list prices or optional-extra specifications, so we cannot tell you with certainty whether a particular car crossed the threshold when new. That answer comes from the original invoice or from the manufacturer.
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