The Expensive Car Supplement: Why Your Car Tax Could Be £600/Year

The Expensive Car Supplement is one of the most misunderstood charges in UK motoring. It adds £410 per year to your road tax for five years if your car’s original list price was over £40,000 — and it catches far more cars than most people expect.

Combined with the standard VED rate of £190, that’s £600 per year in road tax alone. Over the five-year supplement period, that’s £3,000 in VED — a cost that many used car buyers don’t factor in until it’s too late.

1. What the Supplement Is

The Expensive Car Supplement (officially called the “additional rate” for vehicles with a list price exceeding £40,000) is an extra £410 per year on top of the standard VED rate. It was introduced in April 2017 alongside the reformed VED system.

It applies for five years, from the second to the sixth year of the car’s registration. In year one, you pay the first-year rate based on CO2 emissions. From years two to six, you pay £190 (standard rate) plus £410 (supplement) = £600 per year. From year seven onwards, you drop back to the standard rate of £190.

2. The £40,000 Threshold

The threshold is based on the original list price of the vehicle when it was new. This is the manufacturer’s published price including:

• The base price of the car
• All factory-fitted optional extras
• Delivery charges
• VAT at 20%
• Any other charges included in the on-the-road price

Critically, it does not matter what you actually paid. If the list price was £42,000 but you negotiated it down to £37,000, the supplement still applies. If you buy a five-year-old car for £18,000 that had a £45,000 list price, you’re still paying £600/year in VED until it hits its sixth birthday.

3. Which Cars Are Caught

The £40,000 threshold was set in 2017 and has never been increased to keep pace with inflation. As a result, many mid-range family cars and popular EVs now exceed it.

Many buyers are surprised to find that relatively mainstream cars now trigger this surcharge. When the £40,000 threshold was introduced in 2017, it mainly caught premium and luxury vehicles. Car price inflation has dragged it down into the mid-market.

4. Total VED Cost Over 6 Years

The difference in total VED between a car just under and just over £40,000 is significant:

A car that’s just £2,000 more expensive on the list price costs over £2,000 more in road tax over six years. It’s a cliff edge, not a gradual scale.

5. How to Check If Your Car Is Affected

• V5C logbook — Section G shows the vehicle’s list price (on newer V5Cs)
• DVLA vehicle enquiry — Use the free service at gov.uk/get-vehicle-information-from-dvla
• Manufacturer’s price list — Check the original spec and options for the exact variant
• HPI or vehicle history check — Many will show the original list price

6. Buying Used to Avoid It

The supplement applies for years 2 to 6 from the date of first registration, not from the date you bought the car. This means:

• If you buy a 3-year-old car with a £45,000 list price, you’ll pay the supplement for another 3 years
• If you buy a 6-year-old (or older) car, the supplement has expired regardless of original price
• There is no way to avoid the supplement on a car that is still within its first 6 years if the list price was over £40,000

This creates a smart buying strategy: wait until the car is six years old, and the supplement drops off. A 2020 car registered in March 2020 will exit the supplement period in March 2026. From that point, VED is just £190/year.

7. EVs and the Supplement: A Double Hit

Electric vehicles got hit with a one-two punch from April 2025. Not only do they now pay the standard rate of £190/year (previously £0), but many popular EVs also trigger the Expensive Car Supplement because their list prices exceed £40,000.

For EV buyers, this means the total annual VED jumped from £0 to £600 in a single year for many popular models. That’s a £3,000 bill over the supplement period that simply didn’t exist before April 2025.

8. The Threshold Hasn’t Risen with Inflation

The £40,000 threshold was set in April 2017 and has not been increased since. In the nine years since it was introduced, new car prices have risen by roughly 30–40% due to inflation, supply chain costs, and the transition to electric.

In 2017, £40,000 bought you a well-specced BMW 5 Series or a Mercedes E-Class. Today, it barely covers a mid-spec BMW 3 Series or a family EV. The freeze effectively drags more and more cars into the supplement net each year.

There have been calls from motoring groups for the threshold to be raised to £50,000 or index-linked to inflation, but the government has not indicated any plans to change it.

Final Thoughts

The Expensive Car Supplement is a significant hidden cost that catches many used car buyers off guard. At £410 extra per year for five years, it adds £2,050 to your ownership costs — and combined with the standard rate, you’re paying £3,000 in road tax over the supplement period.

The smartest way to deal with it is to know about it before you buy. Check the original list price, factor the supplement into your running costs, and consider whether waiting for a car to reach its sixth year could save you thousands.

VED rates are for the 2025/26 and 2026/27 tax years. List prices are approximate and vary by specification. Always check gov.uk for confirmed rates.