What is the expensive car supplement?

The expensive car supplement – sometimes called the 'luxury car tax' – is a payment applied to vehicles registered from 1 April 2017 onwards with a brand-new price above £40,000. It costs an extra £410 per year on top of the car's regular road tax (VED or Vehicle Excise Duty). That means most expensive models will pay a total of £600 per year – £190 VED plus £410 expensive car supplement – or £590 in total if they're hybrid powered.

If you buy a car with a list price above £40,000 registered from 1 April 2017 onwards, you'll have to pay the expensive car supplement every year from the car's second year through to its sixth year. After that point, you'll go back to just paying the same rate as cars with a list price below £40,000. Both standard-rate road tax and the expensive car supplement are distinct from the car's first-year tax rate, which new-car buyers pay when they register the car and is based on its CO2 output.

The £40,000 figure applies to the car's brand-new list price, including any options specced from the original manufacturer. That means a car with a list price of £38,000 with £3,000 worth of options will pay the expensive car supplement, while a car with a list price of £39,999 and no options will not have to pay the supplement.