First Year Vehicle Tax UK 2026: Showroom Tax Rates Explained

First-year vehicle tax in the United Kingdom, widely known as showroom tax, is the one-off CO2-based Vehicle Excise Duty payment levied in the year a car is first registered with the Driver and Vehicle Licensing Agency, and for the 2025-26 tax year it runs from a nominal £10 for zero-emission vehicles through to a top rate of £5,490 for cars emitting 255 grams per kilometre or more of carbon dioxide. The first-year rate sits alongside the standard rate of £195 per year that applies from year two onwards for all non-zero-emission cars first registered on or after 1 April 2017, and for zero-emission cars first registered from 1 April 2025 under the changes announced in Autumn Budget 2024. Showroom tax is published annually on gov.uk/vehicle-tax-rate-tables by DVLA as part of the Vehicle Excise Duty rate schedule, with the CO2 bands sourced from the vehicle's type approval certificate and shown on the V5C in section V.7. The one-off structure means that buyers of high-emission new cars face a substantial tax burden in year one that drops sharply to the £195 flat rate in subsequent years.

What is showroom tax?

Showroom tax is the colloquial name for the first-year Vehicle Excise Duty rate applied to new cars at the point of first registration, per gov.uk/vehicle-tax-rate-tables. Unlike the flat £195 standard rate that runs from year two onwards, the first-year rate is tiered by CO2 emissions, with the intention of discouraging high-emission purchases through a significant one-off tax cost.

The rate is paid by the first registered keeper, typically the dealership on pre-registration or the buyer on delivery, and is included in the total drive-away cost quoted by UK franchised dealers. Private imports registering in the UK for the first time also pay the first-year rate, based on the CO2 figure declared on the NOVA form to HMRC.

What rates apply in 2025-26?

The 2025-26 first-year schedule on gov.uk/vehicle-tax-rate-tables runs: zero emissions £10 (from April 2025), 1-50 g/km £110, 51-75 g/km £130, 76-90 g/km £270, 91-100 g/km £350, 101-110 g/km £390, 111-130 g/km £440, 131-150 g/km £540, 151-170 g/km £1,360, 171-190 g/km £2,190, 191-225 g/km £3,300, 226-255 g/km £4,680, and over 255 g/km £5,490.

The progression is designed to create steep cost differentials between low-emission and high-emission vehicles. A family SUV at 170 g/km pays £1,360 in year one, while a performance car at 260 g/km pays £5,490, a £4,130 differential. The top band at £5,490 was raised from £2,745 as part of Autumn Budget 2024 reforms taking effect from 1 April 2025.

The rate doubling at the top of the band structure reflects a deliberate Treasury policy of strengthening the emissions signal at new-car purchase, particularly for the high-emissions SUV and performance segments that had continued to grow as a share of registrations despite previous VED reforms. Manufacturers responded by accelerating plug-in hybrid and battery-electric variant launches to pull average fleet emissions below the steepest rate bands.

What CO2 figure determines the band?

The CO2 figure used for first-year rate assessment is the combined-cycle emissions value recorded on the vehicle's type approval certificate, shown in section V.7 of the V5C logbook. For cars approved under WLTP (Worldwide Harmonised Light Vehicle Test Procedure), which applies to all new cars from September 2018 onwards, the WLTP figure is used directly. NEDC-derived figures remain on older stocks but are rare in current first registrations.

Plug-in hybrids typically record low WLTP CO2 figures between 20 and 50 g/km, placing them in the £110 first-year band. Mild hybrids and full hybrids without plug-in capability record higher figures and fall into £270 or £350 bands depending on body size. The £10 alternative-fuel discount applies to hybrids across all first-year bands.

How did zero-emission rates change in 2025?

Zero-emission cars paid no first-year rate and no standard rate until 31 March 2025. From 1 April 2025, zero-emission cars first registered on or after that date pay a £10 first-year rate and the £195 standard rate in year two onwards, per the Autumn Budget 2024 policy update on gov.uk. Zero-emission cars first registered between 1 April 2017 and 31 March 2025 also move onto the £195 standard rate from April 2025.

The change brought zero-emission vehicles into the mainstream VED framework for the first time, reflecting Treasury policy that the EV fleet had grown sufficiently that a VED exemption was no longer fiscally defensible. The £10 first-year rate is nominal, intended to capture the vehicle in the system rather than to generate material revenue.

What is the Expensive Car Supplement?

Cars with a list price above £40,000 pay an additional Expensive Car Supplement of £425 per year from year two to year six, on top of the £195 standard rate, per gov.uk/vehicle-tax-rate-tables. The supplement applies for five consecutive years (years 2 to 6), after which the standard £195 rate applies alone. The supplement was extended to zero-emission cars first registered from 1 April 2025.

List price for this purpose is the manufacturer's recommended retail price including VAT, before any dealer discounts, options, and accessories fitted before first registration. The £40,000 threshold is unindexed and has not changed since it was introduced in 2017, meaning that price inflation has gradually drawn more vehicles into the supplement band year by year.

How do first-year rates compare across vehicle types?

The comparison shows the dramatic year-one differential across the emissions spectrum, with a performance car paying 549 times more than an EV in the first year but identical £195 in every subsequent year. Cars over £40,000 list price pay the additional £425 Expensive Car Supplement in years 2 to 6, pushing the total annual cost to £620 in that period.

What DVLA data is published on first-year receipts?

HM Treasury publishes annual VED receipts in its Autumn Budget and Spring Statement documents on gov.uk, with first-year rate contribution itemised separately from the standard rate base. The DVLA Annual Report and Accounts, tabled in Parliament each year, also provides breakdowns of VED revenue by tax class and registration year cohort.

The Office for Budget Responsibility produces forecasts of VED receipts in its twice-yearly Economic and Fiscal Outlook on obr.uk, incorporating expected shifts in the new car mix between combustion, hybrid, and zero-emission powertrains. Applicants interested in route-specific revenue data should consult the latest OBR release for the live forecast range.

Dealer finance packages commonly quote the drive-away cost inclusive of showroom tax, but the itemised breakdown is available on request and is printed on the invoice. Buyers comparing like-for-like quotes between dealers should confirm that the showroom tax figure matches the CO2 band published on gov.uk/vehicle-tax-rate-tables, because occasional errors in dealer quoting can inflate or under-state the first-year liability. Industry data from the Society of Motor Manufacturers and Traders on smmt.co.uk tracks the monthly new car registration mix by emissions band, giving buyers and analysts a reference point for how typical showroom tax costs are evolving as the fleet electrifies.

Frequently asked questions

Who pays the first-year rate?

The first registered keeper. Dealerships typically collect showroom tax as part of the total drive-away cost quoted to the buyer and remit it to DVLA at registration.

Does showroom tax apply to used cars?

No. Used cars pay the standard rate of £195 from year two onwards. The first-year rate is a one-off payment tied to the first registration date and keeper.

Do hybrids get a discount?

Alternative-fuel cars including hybrids receive a £10 reduction on the first-year rate. The year-two standard rate of £195 applies in full without hybrid discount.

When did EVs start paying VED?

From 1 April 2025. Zero-emission cars now pay a £10 first-year rate and £195 standard rate, per the Autumn Budget 2024 policy.

Is showroom tax refundable if I sell?

The first-year rate is non-refundable once paid. If the car is sold during year one, the original buyer keeps the cost; the new owner inherits the remainder of the first-year tax validity.

What is the top first-year rate?

£5,490 for cars emitting 255 g/km or more, effective from 1 April 2025 under Autumn Budget 2024. The previous top rate was £2,745.

Do first-year rates apply to vans?

No. Vans pay the Private Light Goods (PLG) or Private/Heavy Goods (PHG) tax class rates. Only cars registered for road use fall under the car VED framework.

Sources

• DVLA, Vehicle tax rate tables, gov.uk/vehicle-tax-rate-tables — 2025-26 tax year, accessed April 2026.
• HM Treasury, Autumn Budget 2024, gov.uk — VED reform announcements.
• DVLA, Check if a vehicle is taxed, gov.uk/check-vehicle-tax — accessed April 2026.
• HMRC, Notification of Vehicle Arrival (NOVA) guidance, gov.uk — imported vehicle VED.
• Office for Budget Responsibility, Economic and Fiscal Outlook, obr.uk — VED forecasts.
• DVLA, Annual Report and Accounts, gov.uk — VED revenue breakdown.
• Society of Motor Manufacturers and Traders, smmt.co.uk — new car registration data.

Related reading on kaeltripton.com: UK vehicle tax bands, Car tax bands A to M 2026, Electric car tax changes April 2025.