Vehicle excise duty (VED) is based on CO2 emissions for the first year. This is lumped into the on-the-road price of a new car. After the first year, owners of petrol or diesel cars are charged a flat rate of £150 a year. Hybrid vehicles are charged £140 and electric cars £0. On top of this, cars with a list price of more than £40,000 are charged an extra £325 a year for five years (from the second year). That means, if you buy a petrol or diesel car with a list price of more than £40,000, it'll set you back £475 a year in tax from years two to six. Even if you're the car's second owner, you're responsible for this. After this period, the tax will revert back to the flat rate (so £150 a year for a petrol or diesel car).