Best cars with no road tax and tax-exempt cars

Published: 21 December 2023

Many of us would like to spend less on car ownership and finding a car that you don’t have to pay road tax for is a great way to cut costs.

The annual cost of Vehicle Excise Duty (VED) – also known as car tax or road tax – can be significant, so any savings could make a difference to your budget.

Here we’ll take a look at which cars attract no road tax or are tax-exempt, and list some of our favourites.

There are several types of car that you don’t have to pay road tax for, either because they’re tax-exempt or because the tax is simply rated at zero. If a car is used by a disabled person, for example, they can apply for a disability exemption if they meet the eligibility criteria on the government website.

Then there are cars that qualify for zero road tax because of their environmental credentials – producing either low emissions or none at all. These fall into two categories: pre-April 2017 and electric cars. Let’s go into more detail on each.

We’ll start our list of recommended zero-tax cars with those registered before 1 April 2017. That’s the date car tax rules changed – cars registered before then are taxed according to their carbon dioxide (CO2) emissions.

Each car has an official rating for CO2 emissions, measured in g/km, and that puts them in a tax band between A and M. If the car you’re looking at emits less than 100g/km of CO2, then it sits in Band A, which means you won’t have to pay any VED. Cars in this category are electric or hybrid cars, or especially fuel-efficient petrol and diesel models.

When it was first released in 2016, the Hyundai Ioniq was unusual in that you could only buy it as an ‘alternative fuel’ car – either as a hybrid, a plug-in hybrid or as an electric car.

As with all electric cars, the EV version will cost you nothing in car tax, but so too will early examples of the Ioniq Hybrid, which combines a small electric motor with a petrol engine. Find an Ioniq Hybrid that was registered before April 2017 and it’ll come with a tax bill of zero – post-2017 models have an annual VED bill of £170. Either way, the Ioniq Hybrid is a good car with a roomy interior and lots of features included as standard.

Incidentally, the plug-in hybrid Ioniq wasn’t introduced until after the tax rules changed in 2017, so it doesn’t qualify for zero car tax – only the full-hybrid model will eliminate that charge.

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As one of the original full hybrids introduced to the UK way back in 2000, the Toyota Prius has well proven to be a great buy.

As a Band A car before April 2017, you can pick up a Prius and pay zero car tax. You’ll be looking at a third-generation car, sold new from 2009-2015, or a fourth-generation car, sold new from 2016, to fit into this category. Both come heartily recommended – they have an excellent record for reliability, offer brilliant fuel economy and have lots of space inside. Reasons you’ll often see them used as taxis…

Not all zero-tax cars have to be hybrids. If you’re looking for a city car, then the Kia Picanto is a fantastic choice. Kia offers an unbeatable seven-year warranty on its new cars, so you could be lucky enough to find a pre-April 2017 Picanto that is still covered.

Even if the warranty is expired, the Picanto has a strong reputation for reliability, and when fitted with a 1.0-litre or 1.25-litre engine, it attracts zero VED. As well as having two petrol engines to choose from, you’ll find tax-free Picantos in a range of well-equipped trims, including the 1, 1 Air, 2, VR7, SR7, 2 Ecodynamics, City and Halo. It’s a car that represents great value and low running costs whatever trim and engine you get: take away car tax and it’s an even better deal.

You’d be forgiven for thinking that Band A, tax-free cars all have to be small, but that’s not the case. For example, a Skoda Octavia Estate registered before April 2017 qualifies for zero VED, but offers you a huge boot, loads of rear legroom and a refined, comfortable driving experience.

You’ll want to look for a car with the 1.6-litre 110 diesel engine, which comes in S, Greenline, SE, SE Business and Elegance trims. Sure, it’s not the punchiest engine in the range, but it makes up for that with excellent fuel economy (promising up to 74.3mpg, according to official figures) and of course, no annual tax bill.

A non-hybrid family SUV with zero road tax? Surely not! But yes, it’s possible. Nissan’s Qashqai is a tremendous success story in Britain, with many having been sold and many used ones available.

To find one that you won’t have to pay VED on, you’ll need to look for the only Band A engine, which is the diesel-powered 1.5 dCi 110 model. Although this was an entry-level engine, it’s available on lots of different trim levels – if you want to keep costs down, go for an entry-level Visia but there also are tax-free Qashqais all the way up to the feature-packed Tekna model. It’s a great family option, with a comfortable ride, a decent-size boot and space for two adults in the back seats.

A premium, powerful executive car with no road tax doesn’t sound likely, but with the previous-generation BMW 3 Series that’s exactly what you can get.

The 3 Series was available as a plug-in hybrid called the 330e between 2015 and 2018, and if you can find one registered before April 2017, you’ll pay no VED. You’ll also get a really great car, with lots of power and a sporty driving experience matched to a luxurious interior and sleek looks.

The combination of the 2.0-litre petrol engine and an electric motor gives it 249bhp and an official electric-only range of 25 miles. That makes it both fun and cost-effective if you keep the battery charged and do mostly shorter journeys on electric power alone.

While older Band A cars are great for avoiding large VED bills, electric cars all attract zero tax – at least until 2025. That means you can buy something newer and still dodge that extra annual charge. Here are a handful of the more modern electric cars that we recommend.

Sold new since 2021, the latest version of Fiat’s beloved 500 has all the retro appeal of earlier versions but with all-electric power and a battery that will take you up to 199 miles on a single charge.

It comes bundled with lots of equipment included as standard and while it’s not the most practical of small cars, it’s a desirable city car for a single person or a couple. Higher-spec models are particularly well equipped, but most models have a touchscreen infotainment system with Apple CarPlay and Android Auto. Rear parking sensors are included across the range.

The list of all-electric estate cars is very short indeed, making the MG5 a car with almost unique appeal. Although it’s not the most spacious of estate cars it’s very practical, has lots of interior space and comes with a seven-year manufacturer warranty from new.

The maximum official battery range is 213 miles for older versions and 250 miles for the newer versions, following an update to the range in 2022. All models are incredibly budget-friendly, costing much the same as a rival car with a petrol or diesel engine. Oh, and of course it’s free from any VED charge.

The Tesla 3 is impressively spacious for its size, and has proved very popular with the public, which means there are lots of them on the used market.

Buyers love its distinctive looks and very impressive performance, with the most-powerful models rivalling sports cars when it comes to acceleration. The Model 3 is fun to drive too, feeling nimble and comfortable on all types of road. There are several models to choose from and most will cover more than 300 miles on a single battery charge, according to official figures.

With a battery range of up to 338 miles, depending on the model, the Skoda Enyaq iV is a family SUV that’s practical around town and on longer journeys.

Several versions are available, with different trims and battery sizes, but they all share the same benefits – an electric car that’s a brilliant all-rounder, with lots of space inside and a really large boot. It’s very good to drive and comes packed with useful features, such as an ice scraper stored in the boot lid and an umbrella in the driver’s door.

You’ll find lots of used cars for sale at Cazoo, all available to buy through our trusted dealers.

Cazoo makes selling a car just as easy – just enter a few details for an instant online valuation. If you accept the offer our partners will get in touch to arrange payment and collection of your car at a time that suits you.