Our Top Tax-Free Cars (2020)

04 Dec 2019 by Lisa Simm

Nobody likes paying car tax (VED – Vehicle Exercise Duty), especially when we fall into crater-sized potholes daily.

Below, we have a list of our favourite tax-free cars (new & used). Believe it or not, they aren’t all-electric.

Brand new cars with no road tax.

If you want to drive away from the showroom in a brand new tax-free car, I’m afraid you won’t be feeling a V8 roar beneath your right toe, but a more subdued, electric hum.

Since the 31st March 2017, all new cars with any level of emissions have been taxed by the DVLA, even hybrids as they fall under the ‘alternative fuel’ category. The table below shows the current tax brackets for different fuel types from the second year of ownership onwards – as you can see cars with 0 emissions (electric) pay no tax.

The first year of tax is usually a lump sum that is added into the total cost of the car, then it’s up to you to take care of the tax from the second year onwards.

However, something to keep in mind; if a car costs over £40,000, there’s an extra £320 charged a year for the first five years – this also counts for electric vehicles.

So, if you’re buying a new electric vehicle that costs over £40,000, while there won’t be any standard tax fees, the £320 additional rate will still be applicable.

Fuel TypeSingle 12 month paymentTotal of 12 monthly
payments by direct debit
Single 6 month payment
Petrol or diesel£145£152.25£79.75

Source: https://www.gov.uk/vehicle-tax-rate-tables

So, what are the best tax-free electric cars under £40,000?

1. Hyundai Ioniq Electric

The Hyundai Ioniq is a practical family hatchback, with tones of boot space, a comfortable interior and a range of 230 miles. The simple, yet futuristic styling allows the Ionic to stand out, without causing a scene.

2. Renault Zoe

Since the original launch in 2012, the new 2020 Renault Zoe has been refined with a larger battery, new motor and updated styling. With over 150,000 examples of the Zoe sold across Europe, this compact hatchback is fast becoming a common sight, and thanks to an eight-year / 100,000-mile warranty, they will be sticking around.

3. Kia e-Niro

The Kia e-Niro is quickly gaining traction as an affordable family-sized electric car. This quirky crossover can drive more than 280 miles on a single charge, features plenty of tech and has more boot space than a Nissan Qashqai.

Used cars with no road tax.

So how can you get a tax-free used car, with the convenience of traditional engines? Well, as the tax laws were changed in 2017, cars registered before this date, that produce less than 100g/kg of CO2 are still tax-exempt, making them a great choice on the used market.

1. Ford Fiesta (1.0 Ecoboost)

A common sight across Britain’s roads, the Ford Fiesta continues to be the best-selling car, with good reason. Its groundbreaking EcoBoost technology allowed the hatchback to achieve plenty of miles per gallon, from a modest 100bhp engine no less. The low running costs were boosted even further by the Fiesta’s £0 tax.

2. Toyota Aygo (1.0 VVT-i)

The eye-catching city hatchback features a distinctive ‘x’ front end and with a nippy yet economic engine, that is sure to leave an impression in rear-view mirrors. The compact size of the Toyota Aygo makes it pretty much the most manoeuvrable city car on the market, so it’s easy to park anywhere.

3. Renault Kadjar (1.5 Diesel)

The Renault Kadjar is a great alternative to the Nissan Qashqai, sharing many parts and features due to the French–Japanese partnership, though the Kadjar actually features more legroom and boot space. This practical family SUV is full of tech, such as automatic windscreen wipers and daytime running lights, making it a great choice for the school run.

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Search for your next car

We have 1000s of cars to choose from – New & Used

Deciding the right tax-free car for you

Your next car is a big decision to make, but you could save some tax-related research by choosing the right engine type, size and registration date.

Why not try browsing our full range of tax-exempt used cars for some inspiration.

Or, take a look at our new electric cars available from: Nissan, Renault, Hyundai, Kia, Peugeot, Vauxhall and MG.

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