I want to cut my car tax bill. What’s the best way to do this?

cheaper car tax

The good news is it’s relatively simple to get cheaper car tax. But no matter whether you call it road tax, Vehicle Excise Duty or VED, the bad news is you’ll have to make some sacrifices to get it for less. Unfortunately, car tax is one of the necessary evils of modern-day motoring. And unless you break the law, it’s impossible to do without. However, there are ways of driving cars that are exempt from car tax…

Buy a classic car

cheaper car tax
This Rolls-Royce is already lovely. Zero road tax makes it even better

Vehicles made before 1 January 1979 are car tax exempt because they’re classed as historic. This is what’s known as a rolling exemption and applies to vehicles more than 40 years old. So next year it’ll include cars that were made before 1 January 1980. The year after it’ll include those made before 1981 and so on. The government believes this includes around 10,000 vehicles in the UK.

Buy an eco car

cheaper car tax
Electric cars such as the Renault Zoe don’t pay any car tax

Under the previous car tax regime, cars paid to be on the road according to their carbon dioxide (CO2) emissions. Cars registered from 1 April 2017 onwards were rated for tax according to how they were fuelled. And 100 per cent electric cars were rated £0 for the first year and £0 for every year after that. However, if that car cost more than £40,000 new you will pay a supplement for five years from the second year of the car’s life. This will be £320. Expensive but still less than the £465 that conventionally fuelled cars pay.

Buy an older car

 

cheaper car tax

Any car that’s registered between 1 March 2001 and 31 March 2017 pays tax according to its rated CO2 output. And cars with COemissions below 100g/km are rated at £0. It doesn’t matter whether they’re petrol, diesel, electric or alternative fuel (hybrid). Cars included tend to be at the cheaper end of the scale. Even so, these include popular models such as the Ford Fiesta (above), Fiat 500 and Peugeot 207.

Even if you go for a less clean car, private passenger vehicles registered pre-April 2017 will certainly cut your tax bill. For example, a car that emits less than 120g/km of CO2 such as a Volkswagen Golf or Ford Focus will pay just £30 in car tax. Better than the £145 a year paid by owners of those cars first registered after April 2017.

Steam vehicles

Bearing in mind there are no production cars that employ steam as a means of power, it seems rather ridiculous to make steam vehicles car tax exempt, but there you go. Should you wish to convert your car to steam power, you won’t pay any car tax.

And… if you’re disabled

If you have a disability, make sure you claim disability exemption. You still have to apply for tax – you can be fined if you don’t. But when you do apply, you claim for disability exemption. Find out if this applies to you on the government website here.