Every Driver in a Car Over £40,000 Pays a Stealth Tax DVLA Data Reveals

• DVLA figures obtained under Freedom of Information show 426,758 vehicles now pay the Expensive Car Supplement, up 42 percent from around 300,000 two years ago.
• The charge is £425 a year for five years on top of standard road tax, rising to £440 from 1 April 2026, and it now catches ordinary family cars that were never designed as luxury models.
• From 1 April 2026 the threshold for electric cars alone rises to £50,000, meaning some EV owners who currently pay the charge will stop paying it entirely.

A tax built for supercars is now catching family SUVs

When the Expensive Car Supplement was introduced, a car costing more than £40,000 was a genuine outlier on British roads. It is not anymore. DVLA data obtained through a Freedom of Information request shows 426,758 vehicles currently paying the charge, up from roughly 300,000 just two financial years ago, a rise of 42 percent. Ben Welham of Marshall Motor Group, who requested the figures, put it plainly: the data shows just how many modern cars have ended up above the £40,000 threshold, cars that many drivers would not call expensive by today’s standards.

That is the trap. The £40,000 figure has never moved from the level set when the supplement was introduced, while list prices for ordinary family cars, from mid-range SUVs to well-equipped hybrids, have climbed steadily with inflation and new technology. A car that would have sat comfortably under the threshold five years ago can now tip over it with a mid-range trim and a few common options boxes ticked, and the owner has no idea until the second year’s tax bill arrives considerably higher than the first. Many only find out when a renewal reminder lands with a total that does not match what they budgeted for, having assumed the higher rate applied only to the sort of cars they see advertised as luxury or performance models.

What the charge actually costs and who pays it

The supplement applies for five years starting from a car’s second year of registration, sitting on top of the standard rate of road tax rather than replacing it. It is currently £425 a year, and from 1 April 2026 that rises to £440, under changes confirmed by Chancellor Rachel Reeves in the Autumn Budget 2025. Over the full five year period, a driver of a car caught by the supplement pays more than £2,100 in extra tax alone, on a car that in many cases was bought as a practical family vehicle rather than a status purchase.

The FOI data also shows where the growth is coming from. Hybrid vehicles paying the supplement have more than doubled in two years, from 116,568 to 247,613, as manufacturers price plug-in and self-charging hybrid technology into mainstream models rather than reserving it for flagship trims. Petrol, diesel and electric vehicles make up the rest, and the mix shows this is no longer a tax that only touches performance saloons and premium SUVs.

The rules are about to change, but only for electric cars

From 1 April 2026, the government is raising the Expensive Car Supplement threshold specifically for zero emission vehicles, from £40,000 to £50,000. An electric car priced anywhere in that £40,000 to £50,000 band, which covers a large slice of the mainstream electric SUV and family car market, will no longer trigger the supplement on a new registration from that date. The government estimates more than a million motorists could benefit from the change as it works through the fleet over time, saving the current £425, rising to £440, every year for five years.

Crucially, the threshold for every other fuel type is staying exactly where it is. A petrol, diesel or hybrid car over £40,000 will carry on paying the supplement in full, with no equivalent relief planned. The standard first year VED rate for new electric cars also remains at a token £10 through to March 2030, while the second year standard rate for all vehicles is rising from £195 to £200 from April 2026, a smaller but universal increase that applies regardless of fuel type.

Why this happened now

The change sits alongside a wider package of electric vehicle incentives rolled out this year, including an Electric Car Grant worth up to £3,750 off electric models priced at £37,000 or less, with more than 40 models currently eligible. Taken together, the grant and the supplement change are a deliberate push to keep mainstream electric cars affordable to buy and cheap to keep on the road, at a point when EV registration growth has been strong but still short of the government’s own sales targets. Non-electric buyers are getting no equivalent help, even as more of them find themselves pulled over the same static £40,000 line by nothing more than standard inflation.

A threshold that has never kept pace with prices

The Expensive Car Supplement was introduced in April 2017 at the same £40,000 level it sits at today for petrol, diesel and hybrid cars. Average new car prices have risen sharply in the years that followed, driven by everything from higher raw material costs to the extra technology now fitted as standard on mid-range models, from adaptive cruise control to larger touchscreens and advanced driver assistance systems that were optional extras a decade ago. None of that has been reflected in where the threshold sits. A policy designed to apply a modest extra charge to a small number of premium buyers has, without any deliberate decision to widen it, become a tax that a growing share of ordinary new car buyers walk straight into.

Industry figures have called for the threshold to be reviewed in line with average new car prices, in the same way income tax bands are sometimes adjusted, rather than left as a fixed cash figure that catches more drivers every year purely through inflation. So far the Treasury has confirmed only the electric vehicle carve out, leaving petrol, diesel and hybrid buyers to absorb the widening reach of the charge with no review currently scheduled. Unless that changes, the 42 percent rise in vehicles caught by the supplement over the past two years is likely to keep climbing every year the £40,000 line stays fixed while new car prices do not.

How to check if your car is affected

The supplement is based on a car’s list price when new, including factory options and the delivery charge, not its resale value or what an owner actually paid after a dealer discount. That detail catches out drivers who negotiated a car down below £40,000 but whose vehicle was still listed above it before the discount, as DVLA calculates the charge on the manufacturer’s published list price, not the final invoice. A well-optioned mid-range SUV with a panoramic roof, upgraded infotainment and a tow pack can tip over £40,000 on paper even when the driveaway price a buyer actually negotiated sat comfortably under it.

Anyone unsure whether their car falls into this band can check the original list price on their V5C paperwork or ask their dealer for the figure that was declared to the DVLA at first registration. Buying second hand does not offer an escape either, as the supplement follows the car rather than the buyer for the full five year window from second registration, meaning a nearly new car bought privately below £40,000 can still carry the charge if its original list price crossed the line when it was first sold. For anyone shopping for a new electric car now, waiting until after 1 April 2026 to register a model priced between £40,000 and £50,000 could be worth more than £2,000 over the life of the supplement, simply by timing the purchase after the threshold moves rather than before it.

Sources:

• GB News: Car tax, motorists hit with £425 charge as 400,000 Britons caught in little known tax bracket, citing DVLA Freedom of Information data
• BVRLA: VED changes, Expensive Car Supplement for EVs