Comparison · Vehicle Excise Duty · 2026
VED Premium Supplement vs Standard Rate 2026: The £40,000 Car Tax Trap
Buy a car with a list price over £40,000 and you will pay an extra £440 a year in Vehicle Excise Duty for 5 years, on top of the standard £200 rate. This guide compares the two rates for 2026, including the EV threshold and total cost over time.
TL;DR -- 2026 VED Key Figures
- • Standard rate (year 2+): £200/year
- • Premium supplement: +£440/year for 5 years (years 2-6)
- • Premium threshold: £40,000 list price (petrol/diesel/hybrid)
- • EV first-year rate: £10
- • EV standard rate: £200 (same as ICE cars from April 2025)
Premium Supplement vs Standard Rate: Head-to-Head
| Feature | Standard Rate | Premium Supplement |
|---|---|---|
| Annual cost (2026/27) | £200 | £200 + £440 = £640 |
| Trigger | All cars from year 2 onwards | List price over £40,000 (£50,000 for EVs from Apr 2026) |
| Duration | Every year from year 2 onwards | 5 years only (years 2-6) |
| Based on | Vehicle type/registration date | Manufacturer's list price, not price paid |
Worked Example: £45,000 Petrol Car Over 7 Years
A petrol car with a £45,000 list price is registered, above the £40,000 premium threshold. Costs are compared with an otherwise identical car priced at £38,000.
| Ownership year | £45,000 Car (Premium Applies) | £38,000 Car (Standard Only) |
|---|---|---|
| Years 2-6 (5 years) | £640/year x 5 = £3,200 | £200/year x 5 = £1,000 |
| Year 7 | £200 | £200 |
| Total (years 2-7) | £3,400 | £1,200 |
The £45,000 car costs £2,200 more in VED over the 6-year period covered here, purely because its list price crossed the £40,000 threshold -- a cost that has nothing to do with the car's emissions or fuel type and applies regardless of any discount the buyer actually negotiated at purchase.
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Disclaimer: This comparison is for general information based on 2026/27 Vehicle Excise Duty rates published by the DVLA/gov.uk. EV-specific VED thresholds have changed several times in recent years -- check gov.uk/vehicle-tax-rate-tables for the current confirmed figures before assuming a threshold applies to your vehicle.