Best tax-free cars 2020

Want to pay nothing in VED road tax? These days that means buying an electric car so here are our top tax-free cars to buy

The UK VED (Vehicle Excise Duty) road tax system can be a hugely confusing topic for those coming to it cold - it is littered with pitfalls that can catch you unaware. If you’re looking at buying a new car, you’ll want to know how much that vehicle is going to cost you to tax on a month-by-month basis, and that varies depending on which of the car tax bands your new vehicle falls in to. A new car’s on-the-road price will include its first year of tax, but after that, it’s down to you to pay up every year, unless you opt for a tax-free car, of course.

From 1 April 2017, the government introduced new rules which revamped the UK VED tax system. Cars which previously cost pennies to tax now face significant annual bills and if you want a vehicle that’s free to tax for the foreseeable future you’ll now need an electric car.

That’s right, gone are the days when you could buy a tax-free car running on conventional fuel. Only zero-emissions vehicles will qualify for that particular privilege, and even then there’ll be something to pay annually on models costing over £40,000, so it’s only the lower-priced EVs that are tax-free with even hydrogen fuel cell car owners having to pay something to the taxman.

If you’re worried about company car tax then there’s no need to panic: it’s only road tax on cars registered after 1 April 2017 that’s changed, so low emissions petrol and diesel company cars will still return attractive Benefit-In-Kind rates for the time being. And, of course, the better a car’s fuel economy, the better you’ll be protected against rising fuel prices.

You can click on the links in the list below to see our best tax-free cars...

The UK's best tax-free cars

  1. Kia e-Niro
  2. Hyundai Kona Electric
  3. Nissan Leaf
  4. Volkswagen e-Golf
  5. BMW i3
  6. Renault ZOE
  7. Hyundai Ioniq Electric
  8. Smart EQ ForTwo
  9. Smart EQ ForFour

Kia e-Niro

List price: £32,995

The Kia e-Niro arrived on the electric car market in 2018 and immediately took the lead at the affordable end of things. It uses the same 201bhp motor and 64kWh battery pack system as is found in the Hyundai Kona Electric and is capable of an official range of 282 miles. This, plus the fact that the e-Niro can be had for around £33,000 makes it the compact crossover an attractive buy for first time electric car owners.

Charging from zero to 80 per cent only takes 54 minutes when connected to a 100kW fast charger and the e-Niro’s long electric range means you won’t need to charge it all that often.

While perhaps not the most attractive car on the outside, the e-Niro’s interior is very well built and spacious enough for families, while the 451-litre boot should be more than enough to handle day-to-day living.

Hyundai Kona Electric

List price: £27,250

The Hyundai Kona Electric was launched in 2018 and uses similar technology to the Kia e-Niro. The car quickly garnered praise and awards for its affordability and long electric range.

The Kona Electric uses the same powertrain as the e-Niro, meaning a 201bhp motor and 64kWh battery pack system. However the Hyundai is available with the option of 39kWh or 64kWh battery packs with up to 279 miles of range from the larger battery pack model.

The funky crossover design helps give the Kona Electric some personality and it can turn heads out on the street, especially when painted in one of the more vibrant colour schemes. The interior is well laid out and useable although the back seats are a little cramped and the boot is not as large as it could be.

Prices start at just under £30,000 after the government plug-in car grant is applied, which makes the Kona Electric extremely competitive in the electric car market and an ideal affordable everyday EV.

Nissan Leaf

List price: £27,995

The Nissan Leaf continues to top the electric car sales charts, and there are a number of different reasons for that. It’s a practical, comfortable and refined family hatchback, and the finance deals available at Nissan dealerships are often pretty tempting. So it’s no wonder that the divisive looks and hefty price tag are often overlooked by its clientele.

After recent updates increased the range to 155 miles, Nissan’s flagship electric vehicle has boosted its usability rating dramatically, meaning that long journeys can be undertaken with ease. Provided you’ve got the time to charge it up again, of course.

Volkswagen e-Golf

List price: £30,340

What happens when you take a standard class-leading hatchback and replace the engine with an electric powertrain? You end up with the e-Golf.

Possibly one of the most usable electric cars on sale, it’s just a standard Volkswagen Golf adapted to take electric power rather than being designed from the ground up to work as an EV. Naturally, there are a few imperfections - namely the rough ride - that may have been ironed out had it been designed from scratch, but despite this the e-Golf is a good all-round package.

It costs more to buy than a regular Golf and only comes in GT trim, yet it gets a 9.2-inch infotainment touchscreen, climate control and adaptive cruise control. The biggest drawback is the weight of the batteries. At 318kg they make the car feel heavy in the bends.

BMW i3

List price: £35,350

The i3 is pricey, even for an EV, has a firm ride and is strictly only available as a four-seater, but even so it’s like nothing else on the market. Conceived and constructed by BMW as an electric car from the word go, it offers fewer compromises than rivals that are based on conventional models.

The well-crafted cabin is user-friendly and spacious, plus the car is sharp in corners and rapid off the line. For less enthusiastic driving, the i3 can also be thoroughly relaxing when required, not least because of the peace of mind provided by the claimed range of 195 miles from a single charge.

Renault ZOE

List price: £18,570

The ZOE is one of the cheapest electric cars on sale, but even so it manages to combine a spacious and well-equipped interior with a comfortable and relaxing ride. From behind the wheel at least it feels more like a traditional supermini, although the impracticalities of a limited range inevitably take their toll.

In 2018 Renault updated the ZOE’s engine with a new R110 unit packing 80kW instead of the old 68kW. This means that the most powerful ZOE packs 107bhp although torque remains the same at 225Nm. The new R110 unit saw performance figures alter too, although only slightly as 50mph to 75mph was dealt with two seconds quicker while 0-62mph was achieved in 11.9 seconds. Despite the new powertrain, the ‘real-world’ range of 186-miles remains the same.

Hyundai Ioniq Electric

List price: £27,250

The Ioniq is available as a Toyota Prius-rivalling hybrid, and also as a pure electric car to target the BMW i3, Kia Soul and Nissan Leaf. The electric motor and petrol engine aren’t as well combined in the Ioniq as they are in the Prius, but it does at least offer lots of practicality at an affordable price. In 2019 the Ioniq got a mild facelift as well as an updated powertrain, which borrowed tech from the Kona Electric. A larger 38.3kWh battery saw the range increase from 174 miles to 182 miles.  Charge time improved too with a flat battery being charged to 80 per cent in only 54 minutes.

The Ioniq looks more like a conventional petrol or diesel car than some EVs; the large grey plastic panel in place of the front grille is the only giveaway of the Hyundai’s eco underpinnings. The steering and ride are good while kit is impressive in Premium trim.

Smart EQ ForTwo

List price: £17,695

When the original Smart ForTwo was launched back in 1998, it was designed to be the perfect city car with its diminutive size and economical 599cc engine. But times have changed and now the future is positively electric so the ForTwo has adapted for modern times.

The Smart EQ ForTwo is an all-electric version of the city car, using a 17.6kWh battery and 81bhp electric motor and a range of 96 miles. Performance will not blow you away as 0-62mph takes 11.5 seconds and its top speed is limited to just 80mph, which does make it slower than the equivalent petrol-powered car. Despite the slightly lacklustre performance, the ForTwos’ handling is more than sufficient to tackle any mean city streets, plus its tight turning circle means parking is a breeze.

Prices start at just £17,695, which makes the EQ ForTwo one of the cheapest fully electric cars on the market.

Smart EQ ForFour

List price: £18,190

Similar to the EQ ForTwo above, the Smart EQ ForFour is an all-electric version of the regular ForFour.  

It uses the same 17.6kWh battery and 81bhp electric motor set up as the EQ ForTwo although due to the increased weight and size, performance and range both drop slightly. The range is only 68 miles and 0-62mph takes 12.4 seconds but the top speed still remains limited to 80mph.

Offering twice the amount of passenger space as the ForTwo, the EQ ForFour can seat 4 adults although space in the rear does feel a little cramped while the boot is not the largest at only 150-litres.

The EQ ForFour is more enjoyable to drive than its petrol-powered variant and is a cheaper alternative to other four-seat electric cars such as the Renault ZOE but the low range does restrict usage and could put off potential buyers.

How the VED tax system works

The new Vehicle Excise Duty (VED) rates kicked in from 1 April 2017 with wide-ranging changes to what motorists will pay in the first year and annually thereafter.

Many cars that are were exempt from road tax in the first year of registration now face a significant increase under the new rules, depending on their CO2 emissions. After the initial 12 months, all cars – except zero-emission vehicles – will then face a flat annual fee of £140.

Spend £40,000-plus on a car, and you’ll also have to pay £310 a year on top of your standard VED tax for the five years after that first year of registration. That even applies to zero-emissions models.

If you’ve got an alternative-fuel vehicle – like a plug-in hybrid, pure hybrid or hydrogen car – there’s a different set of rates for the first year and the annual fee thereafter is £10 less at £130.

It’s worth noting that these new VED rates will only apply to vehicles bought after the 1 April deadline. Anything purchased before that date will fall into the old system.

What about hydrogen fuel cell vehicles?

Our tax busters round-up only features EVs, but don’t forget about fuel-cell vehicles. Hydrogen cars like the Toyota Mirai and Honda Clarity FCV are also zero-emissions and will be exempt from VED under the new system.

However, as they’re all so expensive at the moment with list prices of around £50,000, you have to pay the £310 five-year supplement so won’t reap the benefits until after then. The same applies to the Tesla Model S – a zero-emission EV that’s priced above the £40,000 threshold.

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