Car tax is one of those costs that quietly changes every year, and 2025/26 brought a big shift: electric cars now pay it too. Whether you are budgeting for a new car or just wondering why your renewal looks different, the system is more logical than it first appears once you separate the one-off first-year charge from the flat rate everyone settles into. Here is how Vehicle Excise Duty works in 2025/26.
- The standard rate of car tax is £195 a year for most cars from their second year.
- The first-year rate depends on CO2 emissions — from £10 for the cleanest to over £5,000 for the dirtiest.
- Cars with a list price over £40,000 pay a £425 supplement a year for years two to six.
- Electric cars now pay VED since April 2025 — the exemption is gone.
The two parts of car tax
For any car registered since April 2017, Vehicle Excise Duty (VED) has two stages:
- A first-year rate based on the car's CO2 emissions — paid once, usually bundled into the on-the-road price by the dealer.
- A standard rate from year two onward — a flat fee that is the same for almost every car.
For 2025/26 that standard rate is £195 a year. Whether your car is a small petrol hatchback or a large diesel, once you are past the first year you pay the same £195 — unless the expensive-car supplement applies. Check yours on the vehicle tax calculator.
The first-year "showroom tax"
The first year is where emissions matter. The dirtier the car, the more you pay up front:
| CO2 (g/km) | First-year rate (petrol) |
|---|---|
| 0 (electric) | £10 |
| 1–50 | £110 |
| 51–75 | £130 |
| 76–100 | £270–£350 |
| 111–150 | £440–£540 |
| 151–170 | £1,360 |
| Over 255 | £5,490 |
This is why a high-emission performance car can cost thousands in its first year, while an efficient one costs very little. After that first year, they all drop to the £195 standard rate.
The £40,000 expensive-car supplement
Here is the one that catches buyers of premium and electric cars. If a car's list price when new was over £40,000, it pays an extra £425 a year on top of the standard rate — for five years, from year two to year six. So a £45,000 car effectively pays £195 + £425 = £620 a year during that period.
This now hits electric cars too Since April 2025, electric cars pay VED for the first time — a £10 first-year rate, then the £195 standard rate. Crucially, the £40,000 supplement applies to them as well, and many EVs list above £40,000, so a new electric car can face £620 a year in tax during years two to six. The free-tax era for EVs is over.
Older cars work differently
If your car was registered before April 2017, it sits in a different system. Cars registered between 2001 and 2017 are taxed purely on CO2 bands — a low-emission car from that era can still be very cheap or even free to tax. Cars registered before 2001 are taxed on engine size. So the rules above apply to newer cars; older ones follow their own, often cheaper, tables.
Paying and avoiding pitfalls
You can pay annually, every six months or monthly by Direct Debit, though paying monthly costs slightly more overall. Two things to remember: car tax no longer transfers when you buy a used car, so you must tax it before driving away; and if a car is off the road, you must declare a SORN or keep taxing it. Driving untaxed risks fines and clamping, picked up automatically by number-plate cameras. The car running costs calculator folds tax into the full picture of what a car costs to keep.
Frequently asked questions
The standard rate is £195 a year for most cars from year two. The first-year rate varies by CO2 emissions from £10 to over £5,000, and cars over £40,000 pay a £425 supplement in years two to six.
Yes. Since 1 April 2025, electric cars pay a £10 first-year rate then the £195 standard rate, plus the £40,000 expensive-car supplement if applicable.
An extra £425 a year, on top of the standard rate, for cars with a list price over £40,000 when new. It applies from year two to year six.
The first-year rate is based on CO2 emissions, so higher-emission cars pay much more up front. It drops to the £195 standard rate from the second year.
No. The seller's tax is cancelled on sale, so you must tax the car yourself before driving it. There is no longer a paper tax disc — check and tax it online.
Figures are 2025/26 estimates for cars registered from April 2017. Older cars use different tables. Always confirm your exact rate on gov.uk.