What are the best tax free cars available?

Read about some of the best tax free cars available

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There are several benefits to buying an eco-friendly car, including saving on road tax and fuel costs as well as on car insurance.

Electric car charging

Benefits of Electric Vehicles

When choosing a new car there’s a host of benefits on offer if you opt for an eco-friendly set of wheels. Like free car tax. Any electric vehicle (EV) registered on 1 April 2018 or after that costs less than £40,000 is completely free of vehicle excise duty.

In effect, cars that avoid road tax can be among the most affordable new cars to run. Especially if you live in a big city where you may be liable for congestion charges. Though bear in mind, congestion zone discounts and exemptions look increasingly time limited (see more below).

As well as making savings on annual fuel and road tax costs, you may also benefit from cheaper car insurance deals. Some insurers offer lower green car insurance premiums to environmentally friendly car owners.

With MoneySuperMarket, for example, you could benefit from a 5% insurance discount by purchasing green car insurance policy. This deal is available through certain insurance providers who are keen to encourage the use of environmental vehicles.

While this may not sound like a huge amount, it can make a difference – especially when added to the savings you’re making on fuel and road tax.

Further, some green car insurance providers will also offer to offset the pollution caused by your car with a scheme such as tree planting or donating to charity.

Congestion charge savings

Some tax-free cars may be exempt from local tolls such as the London Congestion Charge. This discount doesn’t last forever though. Pure electric vehicles will pay to enter the capital from 2025.

So some advance calendar planning is advised if you’re in the market for an EV and live in or near the London area (though other cities will likely follow suite). The steadily phased-in congestion zone changes are substantial. And some of the language around the changes need careful decoding.

Let’s give it a crack. From 8 April 2019 – 24 October 2021 new London congestion zone standards come into force to improve air quality. Transport for London, the body responsible for the capital’s roads, tube and bus services, defines most VED-free cars as Zero Emission Capable (ZEC) vehicles.

For ZEC vehicles to qualify for an exemption they must:

  • meet the Euro 6 emission standard
  • emit no more than 75g/km CO2
  • have a minimum 20-mile zero emission capable range

If not, an extra £12.50 a day is charged (and £100 for heavy vehicles of 3.5 tonnes or above). However, from 25 October 2021 to 24 December 2025 only pure electric vehicles are eligible for the TfL Cleaner Vehicle Discount.

The Cleaner Vehicle Discount is in fact a 100% exemption – TfL’s language is a little ambiguous (applied for legal reasons, their press office told MoneySuperMarket.com).

From 24 December 2025 the Cleaner Vehicle Discount (or exemption) will be completely killed off. All drivers will pay London’s Congestion Charge – unless they’re registered for another discount or have an exemption (Blue Badge, for example).

ULEZ is coming too

ULEZ stands for Ultra Low Emissions Zone. It’s an additional congestion charge (£12.50 a day) that many Londoners aren’t aware of yet.

The ULEZ fee – designed to hit the owners of older, dirtier cars in particular – may affect not just those who live in Central London but many living inside the North and South Circular road network. It casts a long shadow. It also applies 24/7.

The upshot is that millions of petrol and diesel car owners will need to stump up the £12.50 a day ULEZ daily charge from 25 October 2021 when they use their car. This charge, remember, is on top of the congestion zone charge. 

You will almost certainly be liable for this extra £12.50 per day if:

  • Your petrol car doesn’t meet emissions standards for vehicles registered after 2005
  • Your diesel car is made before September 2015 and isn’t Euro-6 compliant

So this charge will extend to huge swathes of London’s car fleet, plus vans and motorbikes. If you use a ULEZ-liable vehicle just three times a week then that’s close to an extra £2,000 to budget for every year.

And if you’re a night owl, leaving home at 9pm for an evening out and returning five hours later, you’ll pay twice. The fee is based on the calendar day, not how much you use it. Classic cars, or those registered more than 40 years ago, are exempt however.

There’s a good chance ULEZ may be adopted by other UK cities, albeit under a different name.

Eyes down for a more tax-friendly car?

Still bamboozled? Emission charges in a nutshell

  • Range – The new London ULEZ changes arrive 8 April 2019 and operates 24/7. It just covers the central London congestion zone. This is expanded to the North & South Circular road networks from October 2021
  • Cost – Vehicles and motorbikes that don’t meet the new emissions standards pay a £12.50 daily charge within London’s city centre. They also pay the £11.50 congestion charge if they come into London between Monday and Friday, 7am-6pm
  • Am I affected? – You can easily check. As a thumbnail guide, diesel cars registered before 2016 or petrol cars registered before 2005-6 are targeted. Uber and other private hire vehicles are not left out

What are the best tax-free cars?

To help you pick the right EV, we’ve taken a look at five high-profile tax-free EVs available (early 2019), as reviewed by several leading car publications. While we’ve quoted the on-road cash price where possible, competitive leasing deals abound too.

City car – Renault Zoe

The cheapest ‘real world’ EV is Renault’s diminutive Zoe. The £18,920 (after EV plug-in grant) Zoe covers 150 miles before recharges said AutoExpress when it reviewed it in early 2019 “although this only applies when conditions are favourable, as the range drops in cold weather especially”.

Bear in mind you will have to lease the Zoe’s battery separately, which can cost up to an extra £70 per month.

Premium compact – BMW i3

The stylish BMW i3 (around £31,500 with some haggling) is one of the most best-known EVs. “Conceived and constructed by BMW as an economical car from the word go, it seems to offer fewer compromises than its rivals,” was the AutoExpress verdict.

But the small rear window and chunky rear pillars mean reversing is tricky and it “feels bigger than it actually is when reversing into a tight spot, so parking sensors are an absolute must-have,” AutoTrader said in 2018.

Range champs – Hyundai Kona and Kia e-Niro

Anyone nervous of EV range anxiety should head for a Hyundai Kona (250 miles-plus) or Kia e-Niro (around 280 miles). These range figures remain dependent on how you drive, of course. But their on-the-road stamina is more competitive than an VW e-Golf – which manages just a laggy 120 miles between re-juices.

Electric Kona prices start from under £25,000 (including the plug-in grant) while the bigger, more practical e-Niro retails at closer to £33,000 after the same incentive. What Car? wasn’t blown away by the Kona’s interior quality though “everything was sturdily screwed together and most of the Kona’s buttons and knobs operate slickly”.

The e-Niro proposition is rather more compelling than its execution said Autocar, “but it is some proposition and one that moves the game on. On the cost-range continuum, there's nothing to touch it.”

Commuter choice – VW e-Golf

If your work commute is less than 130 miles and you want the ‘feel good’ factor of a Golf with plenty of creature comforts then a £32,550 e-Golf is impossible to ignore. VW claims the car’s range is substantially more than 130 miles (180 ‘officially’) but caution is advised. Heavy use of heater, lights and wipers is a drag on the range of most EVs.

Bear in mind that the e-Golf is a heavily adapted vehicle. It was never designed from the ground up as an EV, unlike Nissan’s Leaf.

Autocar praised the effort overall. “The e-Golf is an excellent EV” it said but warned on future residual values and a poorer ride than its petrol and diesel siblings.

Proven stalwart – Nissan Leaf

The £28,970 Nissan Leaf is well proven (more than 250,000 sold) and the second-generation model is a better-resolved effort than its gawky-looking pre-2017 predecessor. “The Leaf is a delight to drive around town,” said Autocar. “Nissan’s powertrain improvements also make it feel much less out of place on the motorway than the old one did.”

Nissan generally offer some competitive PCP deals on the Leaf but bear in mind that interior quality is still behind most mainstream European brands. “The car’s driving position,” added Autocar, “is improved but still feels oddly perched because you’re sitting, even up front, directly above the drive battery, and still lacks telescopic steering column adjustment.”

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