Tax busters

Want to pay nothing in tax? You’ll have to buy an EV. Here are eight tax-free cars under the new rules

Our guide to the models that will be VED exempt when new rules come in on 1 April

How the system works

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

Many cars that are currently exempt from road tax in the first year of registration will 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 tax for the first five years since registration. That even applies to zero-emissions models.

Currently, anything emitting below 120g/km of CO2 is charged just £30 annually after a free first year, but from 1 April, even owners of models emitting just 76g/km will pay £100 in year one, with rates increasing in line with CO2. 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 is just £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 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, Hyundai ix35 and Honda Clarity 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 zeroemission EV that’s priced above the £40,000 threshold.