Road tax-free cars

Keep your money out of the Chancellor's hands with a road-tax free car - choose from thousands of models

BuyaCar team
Jan 12, 2021

If you're trying to save money on your next car, you'll no doubt be scouring the used car market for the best deal you can find. Whether that's a particularly low cash price, or an excellent value used car PCP finance deal, there's always a way to find a better price for a used car.

But you can do more than just saving money on the cost of the car itself. There are other expenses that can pile up very quickly and make a mockery of all your money saving efforts before you've even taken your new car out for a drive.

One of those extra expenses is road tax. However, the severity of this charge depends very much upon what car you're driving. Any car that was registered prior to April 2017 will be taxed under the old system, which was based upon CO2 emissions and could amount to an annual cost of £570 in 2019 - that's the most extreme case, a 1.6-litre VW Golf registered in 2001 will cost you £235.

The rules changed in April 2017 however, whereby every new car will be subjected to an initial first year tax directly accountable to the car's CO2 emissions (anything between £10 for 1-50g/km through to £2,135 for cars that cost over £40,000 and produce 256g/km+), which is then followed by a continued annual tax cost of £145 thereafter.

Finding a tax-free car used to be simple, but when the system changed in 2017 the number of tax-exempt cars was drastically reduced. If you're buying used, it's worth finding a car that was already on the road before the change, for a saving of at least £400 over three years. Read on for more details on buying a new or used tax-free car.

Road tax-free car deals
BMW 330e

BMW 330eUsed deals from £4,001
Monthly finance from £71*

Renault Zoe

Renault ZoeUsed deals from £4,800
Monthly finance from £95*

Skoda Citigo

Skoda CitigoUsed deals from £4,895
Monthly finance from £103*

Buying a used car with free road tax

In order for a new car to be classified as tax-free, it must produce zero exhaust emissions. This essentially restricts you to an electric car if you want to ensure you have no road tax to pay.

However, hundreds of thousands of used petrol and diesel cars remain tax-exempt and will typically save you more than £400 over three years, compared with buying a similarly powered car that's taxed under the new system. These are cars that were registered between March 2001 and March 2017 that produce less than 100g/km of CO2.

This list includes a number of hatchbacks such as the Hyundai i10 or the Audi A3, but, if you have the budget, you could also stretch to a Volvo V40, Audi A3, Nissan Qashqai, Mini Cooper D and even a Jaguar XE. BuyaCar currently has 969 tax-exempt cars cars for sale, which were first registered before 2017.

Before you go all-in though, it's worth being aware of the charges being imposed in city centres, which will affect most diesel cars, including many tax-free models. London has been operating its ULEZ (Ultra-Low Emission Zone) since April 2018, and most diesel cars that were on the road before September 2015 are subject to its £12.50 daily charge to drive in the centre of the capital.

Birmingham is expected to follow with a similar scheme in early 2020, and more than a dozen other cities could create their own low emission zones.

Most modern petrol cars are exempt, as are diesel cars that comply with the latest emissions standards, known as Euro 6 - this includes every car that was registered since September 2015, as well as some models that met the standards earlier. If you have the budget and you want a diesel, it's worth opting for a Euro 6 car.

Buying a new car with free road tax

If you're looking for a brand new car with free road tax, you’ll have to opt for something without exhaust pipes. As of April 2017, only zero emissions vehicles are road tax free.

All other vehicles are subject to a first-year tax rate that's based on their CO2 emissions, followed by a flat fee of £140 in each subsequent year.

The Nissan Leaf, Hyundai Kona Electric, and Renault Zoe are among the electric cars that are tax exempt, but not all electric cars are taxed in the same way because the new car tax system includes what amounts to a wealth tax.

Owners of cars that had a list price of £40,000 or more when new, must pay a £310 tax surcharge for five years - starting from the car's second year on the road until its sixth.

This means that cars like the Tesla Model S and Jaguar I-Pace do not avoid the duty.

Taxing a tax-free car

People have been inadvertently breaking the law by not ‘taxing’ their tax-exempt vehicle. That’s because, even if you do own a tax-free car, you still need to apply for tax every year. Failing to do so can result in an £80 fine or your car being clamped. It could even be towed away.

Road tax exemptions

The most notable exemption from tax is for historic vehicles, those over 40 years old. The tax-free coding for these types of vehicles is rolling and changes every year. For example, vehicles made before 1 January 1979 were exempt from tax from 1 April 2019.

Vehicles used by a disabled person, disabled passenger vehicles, mobility scooters, powered wheelchairs, and invalid carriages are also sans tax.

Mowing machines, and steam vehicles, are also tax-free.

*Representative PCP finance - Ford Fiesta:

48 monthly payments of £192
Deposit: £0
Mileage limit: 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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