01/01/2001
When it comes to car ownership, the costs can often feel relentless. Fuel prices fluctuate, insurance premiums can be eye-watering, and depreciation is a silent thief of value. However, one significant motoring expense that you can actively manage is car road tax, officially known as Vehicle Excise Duty (VED). For many drivers, particularly those looking to minimise their annual outgoings, understanding the nuances of VED is crucial. Thankfully, by making informed choices, you could find yourself paying as little as £20 or £35 a year, or even nothing at all, for a used car. This is largely down to historical tax regimes that heavily incentivised vehicles with low CO2 emissions.
The Evolution of Road Tax: Pre and Post-2017 Regimes
The landscape of car tax in the UK has seen significant shifts. For cars registered between 1st March 2001 and 31st March 2017, a different tax system was in place. This system was based on a tiered structure, categorised by CO2 emissions. Cars falling into Band A (up to 100g/km) were, and in many cases still are, completely exempt from road tax. Band B (101-110g/km) typically incurred a £20 annual charge, while Band C (111g/km-120g/km) set drivers back £35 per year. This incentivised the purchase of more environmentally friendly vehicles, a trend that continues to influence the used car market.
From April 2017 onwards, the system changed dramatically. A flat-rate tax was introduced for all new cars, regardless of their CO2 emissions. However, this only applies from the second year of registration. The first year's VED is still calculated based on CO2 emissions, with the highest emitters facing substantial bills. Furthermore, vehicles with a list price exceeding £40,000 are subject to an additional premium surcharge of £390 per year from the second year onwards.
Electric Cars and the Future of VED
Currently, electric cars are the sole beneficiaries of free road tax. This has made them an attractive proposition for cost-conscious buyers. However, this exemption is set to change. From April 2025, even electric vehicles (EVs) will be subject to VED, albeit at the lowest first-year rate. This upcoming change means that while EVs are currently the cheapest to tax, this advantage will diminish in the near future.
Top 10 Cheapest Cars to Tax in the UK
To help you navigate the market and find a vehicle that won't break the bank in terms of road tax, we've compiled a list of 10 cars renowned for their low VED costs. This selection includes a mix of new and used options, across petrol, diesel, and electric powertrains.
1. Volkswagen Up
The Volkswagen Up is a perennial favourite for those seeking an economical and enjoyable driving experience. This compact city car, available in three- or five-door configurations, boasts trademark Volkswagen build quality, ensuring a solid feel on the road. Its 1.0-litre petrol engine is remarkably fuel-efficient, leading to low CO2 emissions. Many pre-April 2017 models fall into the tax-exempt Band A, while others are in Band B, costing just £20 annually. Even the sporty Up GTI offers impressive tax efficiency for its performance.
2. Citroën C1
The Citroën C1 is another highly popular and affordable city car that has enjoyed success across two generations. All models are equipped with an economical 1.0-litre petrol engine, making them some of the cheapest cars to tax. The majority of C1s reside in the tax-free Band A, with a few variants in Band B, incurring a £20 annual charge. Its nimble handling and lively engine make it a joy to drive, and its excellent visibility and light controls make it an ideal choice for new drivers. Parking is a breeze in urban environments, and the small boot can be easily expanded.
3. Ford Fiesta
As Britain's best-selling new and used car, the Ford Fiesta is a true icon. Thanks to Ford's innovative 1.0-litre EcoBoost turbo petrol engine, numerous versions of the Fiesta qualify for free or very low road tax. This punchy engine, available in various power outputs, typically results in annual tax bills of no more than £30. Even diesel variants offer low CO2 emissions and correspondingly low tax liabilities. The Fiesta's immense popularity ensures a vast selection on the used market, making it easy to find your perfect match.
4. Nissan Ariya
Nissan has a long-standing history in pioneering electric vehicles, starting with the groundbreaking Nissan Leaf. The Ariya represents the evolution of this expertise, blending the practicality of a family SUV, akin to the Qashqai, with advanced electric powertrain technology. This stylish SUV offers a premium interior and an impressive official electric range of up to 329 miles. It's a testament to Nissan's commitment to electric mobility and stands as one of the finest electric SUVs currently available.
5. Toyota Yaris Hybrid
The Toyota Yaris Hybrid is a remarkably clever piece of engineering. Utilising a downsized version of the hybrid system found in the renowned Toyota Prius, it can operate in pure electric mode at lower speeds. This significantly reduces CO2 emissions, placing it firmly in the tax-exempt Band A. Beyond its tax advantages, the Yaris is renowned for its reliability and ease of driving, thanks to its standard automatic transmission. While the initial purchase price may be higher than conventional Yaris models, the long-term savings on tax and fuel make it a compelling option. Even non-hybrid Yaris models often fall into the lowest tax bands.
6. Renault Clio
The previous generation Renault Clio was a strong contender in the supermini segment, offering a range of highly efficient engines. The 1.5-litre dCi diesel variants are particularly kind to your wallet in terms of road tax, as are the TCe 90 Eco turbocharged three-cylinder petrol models. The latter also provides spirited performance and a refined, smooth driving experience. The Clio is a spacious and well-equipped car with a timeless design that still looks contemporary. It also achieved excellent safety ratings in Euro NCAP crash tests, marking it as a safe and sensible choice for its era.
7. Fiat 500 Electric
Building on the immense success of its predecessor, which itself offered low tax options, the latest Fiat 500 is an entirely new proposition. This all-electric model boasts chic styling, zippy performance, and an impressive electric range of up to 199 miles, depending on the specific model. It stands out in the compact electric car segment, rivalling and often surpassing competitors like the Honda e and MINI Electric. For those seeking a stylish and efficient urban runabout, the Fiat 500 Electric is a top-tier choice.
8. SEAT Ibiza
The SEAT Ibiza, a stylish supermini available in three- and five-door configurations, shares its underpinnings with the well-regarded Volkswagen Polo. When new, the Ibiza was often priced more competitively than its German counterpart, a value proposition that continues into the used market. SEAT offered a diverse range of engines, but the 1.0-litre Eco TSI petrol versions are the most tax-efficient. These models typically feature CO2 emissions below 100g/km, qualifying them for free road tax. Even the standard Eco TSI models fall into the lowest tax bands, ensuring affordable annual bills. The Ibiza is also praised for its solid build quality, generous equipment levels, and user-friendly driving dynamics.
9. Škoda Citigo
The Škoda Citigo is the Czech sibling to the Volkswagen Up, offering a similar package of affordability and efficiency. It was a popular choice when new, meaning a good number of examples are available on the used market. Many Citigo models fall into the tax-exempt Band A, with some higher-spec variants in Band B, resulting in low tax costs and economical running. It's also a nippy and engaging car to drive. Keep an eye out for the Monte Carlo models, which offer a sportier aesthetic without the associated increase in running costs.
10. Smart Forfour
The Smart Forfour presents an intriguing alternative to the compact, two-seat Smart Fortwo. While longer than its sibling, it remains exceptionally short, and as its name suggests, it can accommodate four occupants. Its compact turning circle makes it incredibly manoeuvrable in tight city streets. The tiny turbocharged petrol engine is also exceptionally economical. Crucially, every Smart Forfour registered under the pre-2017 VED system qualified for free road tax due to its low exhaust emissions, all falling within Band A. This makes it a confident choice for anyone prioritising low tax bills and a positive environmental impact.
Key Takeaways for Minimising Road Tax
- Prioritise Pre-2017 Models: Cars registered before April 2017 often fall into lower or zero VED bands based on CO2 emissions.
- Look for Low CO2 Emissions: Aim for vehicles with CO2 emissions under 100g/km for tax-free status, or in the 101-120g/km range for very low annual charges.
- Consider Hybrids and Small Petrol Engines: Many hybrid models and cars with small, efficient petrol engines (like 1.0-litre units) are excellent for low tax bills.
- Electric Cars (Currently): While still tax-free, remember this will change from April 2025.
- Check Tax Bands: Always verify the specific VED band and cost for any car you are considering, as variations exist even within the same model.
Frequently Asked Questions (FAQs)
How do I find out how much my road tax is?
You can check your current road tax by visiting the UK government's official website and entering your vehicle registration number.
Why should I look for cars registered before April 2017?
Cars registered between March 2001 and March 2017 were taxed based on CO2 emissions, with a sliding scale of tax bands. Many of these vehicles, particularly those with lower emissions, are now very cheap or free to tax annually.
What happened to road tax after April 2017?
From April 2017, a flat-rate VED system was introduced for new cars. The first year's tax is still based on CO2 emissions, but subsequent years feature a flat rate, with an additional surcharge for cars over £40,000.
Do electric cars have free road tax?
Yes, currently all new electric cars have free road tax. However, this exemption will end from April 2025, when they will be subject to the lowest VED rate.
By understanding these tax regulations and focusing on models with low CO2 emissions or electric powertrains, you can significantly reduce your annual motoring costs and ensure your car ownership remains as affordable as possible.
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