Best tax-exempt cars

If you're looking for a new car that's tax exempt, then you'll need to go electric

BuyaCar team
Mar 19, 2021

If you're looking for a brand new car that’s free from road tax, your only choice is to go for an electric car. A new tax system was introduced on April 1 2017 that took tax-free status away from all other low-emission petrol, diesel and hybrid cars, and instead covered them all with a new £140 annual tax bill.

Only electric cars producing zero exhaust emissions are now tax-free, along with the handful of hydrogen vehicles on the road. Their prices are discounted too thanks to a government plug-in car grant, which provides up to £2,000 towards the cost of a brand new electric car with a value of less than £35,000.

All of these small savings help to reduce the overall cost of owning an electric car, although they are still generally a few thousand pounds more expensive than a petrol or diesel equivalent. For really cheap motoring, you will need to ensure that your car had a list price of less than £40,000 when it was new. Vehicles over this limit are liable to a tax surcharge under the new system, which will cost you £310 per year for five years.

You can easily avoid this additional cost if you’re not set on a brand new car, though. Used cars, which were on the road before April 2017 and produce low levels of carbon dioxide emissions (the limit is 100g/km CO2 or less), continue to be taxed under the old system and retain their tax-free status, whether powered by petrol, diesel or electricity. They are also cheaper to buy, having lost some of their value already.

We’ve highlighted the best used tax-exempt cars in a separate article. Scroll down for our pick of the top 5, new, battery-powered, zero-rated tax-busters.

Best new tax-exempt cars

1. Renault Zoe

Best tax-exempt car for chic style

Used deals from £20,990
Monthly finance from £311*

A new Renault Zoe was launched in 2020 with a tweaked appearance and upgraded internals. Renault's bid to maintain its dominance in the small electric car market, the Zoe remains competitively priced against new rivals such as the Vauxhall Corsa-e and Peugeot e-208

Among the new additions is a 52kWh battery capable of sustaining forward motion for up to 238 miles, a long way clear of the Corsa-e and the larger Nissan Leaf. It's best suited to city driving, with instant acceleration from a standing start that tails off quickly as you stretch towards 60mph, while it's not what you'd call agile around corners.

If the original Zoe was a good start to life for this small electric car, this second-generation model goes a long way to building on that foundation and offering a well-rounded electric car - there's even a 338-litre boot, which is big enough for a weekly shop.


2. Nissan Leaf

Best tax-exempt car for electric range

Used deals from £17,358
Monthly finance from £272*

If you’re ready to take the leap and replace your family car with an electric model, then the Nissan Leaf is a decent choice. With as much space inside as a Volkswagen Golf, a comfortable ride and a reasonable price (after the government grant), it doesn’t feel like a compromise when you’re behind the wheel.

That’s also because the Leaf has finally been upgraded with an improved battery that should provide more than 200 miles of range on a single charge, no matter what the conditions outside.

The old Leaf was awkward to look at, but the new one is much more traditional. To some it’s still the ugly duckling of electric cars; to others, it’s a mould-breaker. Like most of the other cars on this page, it loses value fast, so you should take advantage of the Nissan Leaf discounts on new models to reduce the financial impact that will have.


3. BMW i3

Best tax-exempt car for fun driving

Used deals from £15,499
Monthly finance from £274*

Built from scratch as an electric car, the BMW i3 maximises the benefits of electric power that uses batteires and an electric motor that are linked by wires. Without the mechanical parts of a conventional car running through the interior, the i3 is surprisingly spacious and practical behind its high-tech styling and rear-opening ‘suicide’ doors. The batteries are crammed in underneath, so you have a flat floor and room to stretch out in the back.

Early cars had a range of around 90 miles in normal driving, which increased to approximately 125 miles in 2017 with aa larger 94Ah battery. Another update will arrive at the end of the year, increasing the capacity of the battery to 120Ah and increasingrange further. Should it run out of juice, the i3 can be charged in 40 minutes from a rapid charger.

It’s a BMW, so you do get a kick of power when you press the accelerator. And it’s nimble too, for a car that’s relatively tall and heavy. It’s not particularly cheap as a new car, but used BMW i3 deals start at £15,499 on BuyaCar.BMW i3 BUYERS' GUIDE

4. Kia Soul EV

Best tax-exempt car for boxy charms

Used deals Limited stock

Even in conventionally powered form the Soul is a pretty unconventional looking car, so as an electric model, it fits right in with other quirky electric options such as the first-generation Nissan Leaf and Citroen C Zero.

Except for its digital dials, gloss white finish on the dashboard and 8in touchscreen with sat-nav, the EV’s interior is much like any other Soul’s, too. It’s on the road that it feels different. Like most electric cars, the power arrives in an instant and the motor is eerily quiet. The ride is quiet, too, making it a comfortable and relaxing car to drive.

It’s nippy around town but runs out of puff on faster, more open roads. If you find a fast charging point, you can charge the Soul in 30 minutes. Otherwise it’s a 12-hour job using a domestic socket.


5. Hyundai Ioniq Electric

Best tax-exempt car for practicality

Used deals from £21,680
Monthly finance from £321*

The Hyundai Ioniq is similar to the Toyota Prius, in that it’s a five-door hatchback with green credentials. But the biggest difference is that Hyundai’s version comes in hybrid, plug-in hybrid, and fully electric versions.

This fully electric version is just as practical as the others, but it emits no emissions. Like many other electric cars it’s surprisingly quick off the line, but runs out of steam at around 50mph.

It also boasts Hyundai’s five-year/unlimited mile warranty, which is especially reassuring if you’re moving into an electric car for the first time.


*Representative PCP finance - Ford Fiesta Titanium:

Monthly payments over 48 months: £192
Deposit: £0
Mileage allowance: 8,000 per year
Optional final payment to buy car: £2,923
Total amount payable to buy car: £11,926
Total cost of credit: £2,426
Amount borrowed: £9,500
APR: 9.9%

Buyacar is a credit broker, not a lender. Our rates start from 6.9% APR. The rate you are offered will depend on your individual circumstances.


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