Which Vehicles Have the Lowest Road Tax?

If you drive a car on the road in the UK, you probably need to pay road tax or Vehicle Excise Duty (VED) on it. Purchasing this used to be a very straightforward affair : there were two set prices - one for 6 months and one for 12 months and you went into the post office armed with your documentation and handed over the cash. It didn't matter what size engine your car had or what its CO2 emissions were - motorists all paid the same price, and fixed the little round tax disc onto the inside of their windscreen, then forgot about it until they needed to renew it.

Nowadays, however, it's a bit different. Cars are measured depending on their CO2 emissions and are placed into one of 13 groups - currently ranging from A-G which will determine the cost that the driver pays for their road tax. Next year, the road tax is going up again for cars that emit more than 255g of C02 per kilometre - this will include high performance cars such as Jaguars, and larger 'urban' vehicles such as some models of people carriers and 4x4s - and this will increase the range to cover bands A-M.

If you drive an older used vehicle with a large engine, don't panic. If your car was registered before 2001, then it isn't affected by these changes and you will pay either:

• £120 per year or £66 for 6 months - if engine size is lower than 1549cc
• £185.00 per year or £101.75 for 6 months - if engine size is higher than 1549cc.

However if your car was registered after 2001 then it is going to be re-categorised by Co2 emissions as described above - and so the cost is likely to change.

The easiest way to bring down your car tax cost is to think about it carefully when you're getting a new car and do your research. Find out when the car was manufactured, and what band it falls into and how much it will cost you to tax - both now and when the future changes come in 2009.

There is good news too though. If you want to do your bit for the environment and are tempted by the idea of driving a hybrid car, such as a Honda Civic hybrid or a Toyota Prius, then you will only pay £15 for a full years duty and you‘ll be exempt from the congestion charge which can save you a fortune if you drive regularly in the Capital. If you are more of a vintage person, then you might be interested to know that 'classic' cars are exempt - although unfortunately, your 15 year old Mini won't count - it's only cars that were manufactured before 1973 that benefit from exemption.

So Which Cars Should I be Looking at?

There are several cars you can look at that have models starting with really low yearly road tax costs, including:

from £35 yearly cost (changes with model)

• Toyota Aygo (diesel and petrol)
• Peugeot 107 1.0 -
• Ford Fiesta
• Renault Clio diesel 1.5
• Peugeot 207 1.4

How you Pay

Even the way that you buy your road tax can make a small difference to the cost. If you buy your full years licence, you can usually save some money - it costs about 10% more for you to buy your licence in 6 month chunks, and if you're driving a higher banded vehicle, then it can work out be a fair amount. You can buy it online too, which can save you money on fuel and parking fees if you don‘t live near to a post office.

2009 Changes

In 2009, the car tax bands will change and expand to include new categories. the highest band will be M - this will cover cars that have 225+g of Co2 per kilometre, and the price for this will be £440, rising up to £455 in 2010. If you buy your car in 2010 then there is also a first year tax rate that you need to pay, which works out at a whopping £950 - certainly worth bearing in mind as an extra cost before you sign up to purchase a more expensive vehicle.

Why is it Getting so Expensive?

It seems that the government believe changing the Car Tax bands is the most effective way to ’encourage’ drivers to downsize or buy more eco-style cars - or get hit hard in the pocket for the privilege of driving a higher performance or bigger sized car. If you are purchasing a new car, do make sure you check the Vehicle Excise Duty band that it falls into - or you could find yourself far more out of pocket than you expected to be.