Cars with a list price over £40,000 (including options) registered after 1 April 2017 incur an extra "expensive car supplement," bringing the total annual tax to £620 for years two through six. This includes the standard rate plus a £425 surcharge, after which it reverts to the standard rate.
If your car has a list price of over £40,000 you'll have to pay an extra cost known as the luxury car tax. From 1 April 2026, the list price at which you'll pay the luxury car tax will increase to £50,000 for electric vehicles. Non-electric cars will still have the same £40,000 threshold.
Choose a model below the threshold – Consider a lower trim level or remove expensive optional extras.
Lease a car that's already registered – If the vehicle is over one year old and previously registered, the initial VED and luxury surcharge may already be covered.
To avoid the UK's 60% tax trap (where your £100k+ income causes a rapid loss of your £12,570 personal allowance), the most effective methods involve reducing your adjusted net income below £100,000, primarily through pension contributions (personal or workplace), charitable donations (Gift Aid), salary sacrifice for benefits like company cars, or claiming all allowable employment expenses, all of which effectively give you higher-rate tax relief on the money you redirect.
Firstly, luxury cars offer superior comfort. From high-end materials like genuine leather and real wood trim to advanced ergonomic designs, every aspect of a luxury car's interior is designed to provide maximum comfort and an unrivaled sensory experience.
Which car brand is most expensive to maintain in the UK?
Ford and Vauxhall are the most common – and generally cost less to repair. Citroën surprised us with one of the highest average invoices – usually due to tricky-to-source parts or labour-heavy fixes. BMW and Audi sit near the top for average costs — no shock there, given their complexity and brand-specific components.
What significant changes to car tax rates in 2025 will impact vehicle owners in the UK?
What are the road tax changes in 2025? New zero-emission cars registered on or after 1 April 2025: The VED will increase to the lowest first-year rate of £10 until 2029-30. After the first year, electric cars will be subject to the standard annual rate of £195.
The fastest and easiest way to cancel your road tax and get a refund is through the DVLA's online service, but you can also contact them by post or phone.
The HMRC 4-year rule generally means you have four years from the end of the relevant tax year to claim a refund for overpaid tax or for HMRC to issue a discovery assessment for underpaid tax due to a genuine mistake. This limit extends to six years for "careless" errors and 20 years for "deliberate" actions, with longer periods applicable for offshore matters (12 years) or specific non-domicile regimes. The rule applies across most taxes, but timeframes vary depending on the reason for the error.
What percentage of people earn over 100k in the UK?
Around 4% of UK workers earn over £100,000 annually, placing them in the top tier of earners, though some sources suggest slightly higher figures around 5%, while others highlight significant regional concentrations, particularly in London and the South East, with millions of individuals now earning this amount. Despite being high earners, many in this bracket don't consider themselves wealthy, feeling their high incomes don't stretch as far due to living costs, notes The Independent, Unbiased, Startups.co.uk, Jooble UK, HSBC UK, This is Money, The London Economic, Quora, Reddit, PMA Accountants, Chase UK, City AM, The Guardian, Instagram].
The choice between a car allowance and salary sacrifice comes down to a balance of flexibility and value. A cash allowance provides flexibility but offers less value. Salary sacrifice has a more restricted range of choices, but offers the best value, particularly when sourcing a new car.
Yes, the zero road tax (Vehicle Excise Duty or VED) for most electric and low-emission vehicles in the UK was effectively scrapped from April 1, 2025, meaning they now pay tax, though at a lower rate initially for newer EVs. While fully electric cars registered before April 1, 2025, now pay the standard rate (£195/year), new EVs pay £10 in the first year, then the standard rate from the second year, with an extra charge for expensive models over £40k. Low-emission cars (under 100g/km CO2) also now pay £20 annually instead of being exempt.
How do I claim my 50% road tax reduction from DVLA?
To claim your 50% DVLA road tax reduction (for receiving the PIP standard mobility component), you must send the required documents via post to the DVLA Swansea, SA99 1BF DVLA, Swansea, SA99 1BF, including the V5C logbook, valid MOT (if needed), a completed V10 form, and a statement from the DWP confirming your PIP entitlement, plus a cheque for 50% of the tax.
To qualify for historic vehicle tax exemption in the UK, cars must be at least 40 years old. If your car or van was built before 1 January 1984 or registered before 8 January 1984, you do not need to pay road tax as of this past April (1 April 2024).
