Want to pay nothing in VED road tax? You’ll have to buy an EV. Here are out top 10 tax-free cars under the latest rules
The UK VED road tax system can be full of pitfalls, especially for the unacquainted. If you’re buying a new car, you’ll want to know how much that vehicle is going to cost you on a month-by-month basis, and that can vary wildly depending on which of the car tax bands your new wheels fall into. More often than not, a car’s on-the-road price will include its first year of tax, but after that it’s down to you to pay up every year.
From 1 April 2017, the government introduced new rules which completely shook up the system. Cars which previously cost pennies to tax now face significant annual bills and if you want a vehicle that’s free to tax for the foreseeable future you’ll now need an electric car.
• Read all about the changes to the car tax system here
That’s right, gone are the days when you could buy a tax-free car running on conventional fuel. Only zero-emissions vehicles will qualify for that particular privilege, and even then there’ll be something to pay annually on models costing over £40,000, so even hydrogen fuel cell cars pay the taxman for the first few years.
• Most economical cars
If you’re worried about company car tax then there’s no need to panic: it’s only road tax on cars registered after 1 April 2017 that’s changed, so low emissions company cars will still return attractive Benefit-In-Kind rates. And, of course, the better a car’s fuel economy, the better you’ll be protected against rising fuel prices.
• Best hybrid cars to buy now
How the VED tax system works
The new Vehicle Excise Duty (VED) rates kicked in from 1 April 2017 with wide-ranging changes to what motorists will pay in the first year and annually thereafter.
Many cars that are were exempt from road tax in the first year of registration now face a significant increase under the new rules, depending on their CO2 emissions. After the initial 12 months, all cars – except zero-emission vehicles – will then face a flat annual fee of £140.
Spend £40,000-plus on a car, and you’ll also have to pay £310 a year on top of your standard VED tax for the five years after that first year of registration. That even applies to zero-emissions models.
If you’ve got an alternative-fuel vehicle – like a plug-in hybrid, pure hybrid or hydrogen car – there’s a different set of rates for the first year and the annual fee thereafter is £10 less at £130.
It’s worth noting that these new VED rates will only apply to vehicles bought after the 1 April deadline. Anything purchased before that date will fall into the old system.
What about hydrogen fuel cell vehicles?
Our tax busters round-up only features EVs, but don’t forget about fuel-cell vehicles. Hydrogen cars like the Toyota Mirai, Hyundai ix35 and Honda Clarity are also zero-emissions and will be exempt from VED under the new system.
However, as they’re all so expensive at the moment with list prices of around £50,000, you have to pay the £310 five-year supplement so won’t reap the benefits until after then. The same applies to the Tesla Model S – a zero-emission EV that’s priced above the £40,000 threshold.
You can click on the links in the list below to see our 10 best tax-free cars (in alphabetical order), or navigate using the menu at the top left of this page…
The UK’s best tax-free cars
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