Understanding the Luxury Car Tax Surcharge
The luxury car tax surcharge, also known as the expensive car supplement, applies to vehicles with a list price over £40,000. This guide explains how the surcharge works, who needs to pay it, and how to calculate your liability.
What is the Luxury Car Tax Surcharge?
The luxury car tax surcharge is an additional annual payment that applies to:
- Vehicles with a list price over £40,000
- Applies for five years from the second year of registration
- Payable in addition to standard vehicle tax rates
- Currently set at £355 per year
Understanding List Price
The list price includes:
- Manufacturer's published price
- Optional extras and accessories
- VAT and delivery charges
- First registration fee
When and How Long Do You Pay?
The surcharge payment schedule works as follows:
- Starts from the second year of registration
- Continues for five consecutive years
- Payable alongside standard vehicle tax
- Can be paid annually or in six-month installments
Exemptions and Special Cases
Some vehicles are exempt from the surcharge:
- Zero-emission vehicles (until April 2025)
- Vehicles over 40 years old
- Certain specialist vehicles
Calculating Total Tax Cost
To calculate your total annual vehicle tax with the luxury surcharge:
- Determine your standard rate based on fuel type and emissions
- Add the £355 surcharge if applicable
- Consider payment frequency (annual vs. six-monthly)
Example Calculations
Petrol Vehicle Over £40,000
- Standard rate: £165
- Luxury surcharge: £355
- Total annual cost: £520
Electric Vehicle Over £40,000
- Current: £0 (exempt until April 2025)
- From April 2025: £355 surcharge applies
How to Check if Your Vehicle is Affected
To determine if your vehicle is subject to the surcharge:
- Check the original sales documentation
- Contact the vehicle manufacturer
- Use the DVLA vehicle enquiry service
- Consult your V5C registration document
Conclusion
The luxury car tax surcharge can significantly increase your annual vehicle tax costs. Understanding whether it applies to your vehicle and planning for the additional expense is important for luxury vehicle owners.
To calculate your total vehicle tax including any applicable luxury surcharge, use our free car tax calculator.