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The Best Cars with Low Tax

If you’re being savvy with your running costs when car budgeting, it’s a good idea to ask, which cars have low or no road tax?

With a tempting zero tax introduction on its way this April 2020 for electric company cars, there is no doubt that the demand for affordable electric vehicles is on the rise.

But outside of company cars tax changes, all motorists should be mindful when looking for the best cars with low tax to help make their money go the distance.

Zero Emission BIK Tax Drop

As of April 2020, car tax changes are set to scrap benefit-in-kind (BIK) tax rates.

The zero percent rate will apply to vehicles registered from 6 April 2020, producing between one and 50g/km of carbon dioxide and is capable of more than 130 miles on battery power alone.

Combining BIK tax breaks, general fuel saving and zero emission zone exemption perks, will make the transition to electric extremely appealing, driving a massive surge in pure electric cars ahead of the government’s 2035 petrol and diesel ban.

New Tax Testing Arriving 2020

From 1st April 2020, a more accurate way of testing a vehicle’s CO2 emissions will also be introduced for all new cars. The ‘Harmonised Light Vehicles Test Procedure’ (WLTP) will now determine a vehicle’s official fuel consumption, range and CO2 emissions. As the WLTP test is more rigorous, the results will be more realistic and could ultimately mean an increase in road tax for new cars in 2020.

This change takes effect from 1st April for personally owned VED (Vehicle Excise Duty i.e. Road Tax) and 6th April for Benefit in Kind on Company Car Tax.

Hatchback’s with Low Car Tax

Due to their small petrol engines and even more hybrid models now being available, hatchback cars have a smaller Co2 emission rate and consequently lower tax rate than many other types of car. Making them a sound economic option ideal for first time car owners, as well as families, as they are often packed with savvy storage options too!

Mercedes Benz A-Class Hatchback – From £23,710 OTR
Annual Road Tax £145

The Mercedes Benz A-Class is a grown up hatch with a luxury touch, brimming with infotainment tech for the real wow factor. Its efficiency has a combined 51.4 mpg and Co2 emission rate of 128-135 g/km (band F to G depending on the model).


Audi A3 Sportback – From £24,900 OTR
Annual Road Tax – £145

Now in the fourth generation of the Audi family’s premium family hatchback, the new Audi A3 hatchback is a practical five-door hatch for your growing family, but equally ideal for nipping around towns with ease. Available in different trim levels and engine sizes, the most economical being the 1.0 litre engine SE Technik. Producing 111 g/km Co2 emissions and 56.5 mpg

Toyota Yaris Hybrid – From £19,340 OTR
Annual Road Tax – £0

Toyota have taken their already highly efficient reputation to a new level with the Toyota Yaris 1.5 petrol hybrid, that proudly delivers 85.6mpg and low CO2 emissions of 75g/km. Though it costs a little more up front, hybrid models will prove to be the preferred choice of many company car users and private buyers thanks to its low tax, BIK, running costs and combined environmental impact. 

Volkswagen e-Golf Hatchback – From £21,120 OTR
Annual Road Tax – £0

That classic Golf appeal now with an urban electric twist, the e-Golf is all the quality you’d expect from VW, plus an impressive e-range of 144 (WLTP) miles. Costing just 4p per mile, you’ll get from London to Brighton and back on a single charge. You can top up to 80% power in just 45 minutes and you’ll even avoid the emission zone charges – ideal for city driving.

Best Low Car Tax Coupes


Known for their style, power and speed, you may not associate coupes with being economical. However, we have some serious contenders, particularly for the business users looking for a tax relief on their next company car.

BMW 2-Series Coupe – From £25,765 OTR
Annual Road Tax – £145

The BMW 2 Series Coupe is the definition of sporty coupe with its high performance engines reaching 0-62mph in just 4.8 seconds. However, the driver is in ultimate driving control and is able to choose between the Comfort, Sport and the ECO PRO mode, geared towards fuel-efficiency, which intelligently adapts the acceleration and transmission, as well as the heating and air conditioning settings for a fully efficient drive.

Smart EQ ForFour Coupe – From £17,765 OTR
Annual Road Tax – £0

The Smart EQ ForFour is a practical coupe (did we mention it has four seats!) with interior space for the whole family, while being the perfect city run around that all smart lovers cherish. All Smart EQ models are powered by the same 82hp/60kW electric motor and 17.6kWh battery providing a maximum range of 80miles, while the battery itself is guaranteed for 8 years or 62,500 miles – great when you’re investing in an electric powerhouse.

Best Low Car Tax Estates


Estate cars are typically perfect for families, with extra room inside, as well as larger boot spaces for carrying the extra load. They are also great when considering your car tax too, by choosing the best low tax estate car available.

Volkswagen Passat – From £25,580 OTR
Annual Road Tax –  £20

With all the additional space needed for families, a 5 star Euro NCAP rating and a 1.6 litre four cylinder engine model, the VW Passat Estate is a cut above. Fuel efficiency is a respectable 55 mpg and emission rate of 129 g/km making the Passat a great upgrade from the Golf for growing families looking to stay economical.

Mercedes-Benz C-Class Estate – From £37,190 OTR
Annual Road Tax – £145

The Mercedes-Benz C Class Estate is the perfect family cruiser. Based on the stylish C-Class coupe but with a large estate rear body. This estate is packed with cutting-edge technology that you’d expect from a Mercedes. With the option to add further safety features such as 360-degree cameras, lane assist and collision prevention technology. A stand-out car in Estate form that has low tax rate, not many Estates can boast about that.

Best Low Car Tax SUVs


Bigger and taller than normal car models, Sports Utility Vehicles (SUVs) are the perfect cross over between style and space, offering a comfortable driving experience and off-road adventure. Once upon a time they may have had a bad reputation for fuel economy and C02, but with advances in all engines, SUVs are in high demand.

MINI Countryman Hybrid – From £31,880 OTR
Annual Road Tax – £TBC

(As it’s a hybrid it is expected to be in line with other hybrid models)

The Mini electric movement has begun. If you require more space than the 3 door hatch however, the MINI Countryman Hybrid offers all the space and drivability of a MINI with the added space on an SUV. The winning factor being the plug-in hybrid technology, using a combustion petrol engine and electric motor to power your next adventure.

Mercedes-Benz GLA-Class – From £27,265 OTR
Annual Road Tax – £20

The smallest in the Mercedes SUV range, the GLA A-Class has all the style of the A-class with the additional room and driving comfort of an SUV crossover. Two models available in early 2020 will be powered by a 1.3 litre engine and has an efficient 50.4 mpg and CO2 out of 129-135 g/km.

Lexus NX Hybrid – From £39,655 OTR
Annual Road Tax –  £135

The Lexus NX Hybrid engine is a new compact SUV from Lexus, available in multiple engine sizes with tall but the entry level armed with all-wheel drive mode.

It’s 2.5 litre, four-cylinder petrol unit with an electric motor system fitted to the front and rear axle accomplish 195bhp and achieve a fuel-saving 54.3mpg and CO2 rate of 120g/km to curb your annual tax bill down.


Toyota C-HR – From £28,005 OTR
Annual Road Tax – £135

The dramatically stylish and attention grabbing Toyota C-HR is built for the city lifestyle as well as spreading your wings come the weekend. It boasts state-of-the-art safety system and oozes comfort factors, with a high and spacious interior cabin design.

It marks the introduction of hybrid capability for Toyota’s crossover SUV range and is a highly efficient lightweight and stylish model from the brand, capable of emitting just 90g/km CO2 emissions.

Jaguar I-Pace – From £64,495 OTR
Annual Road Tax –  £320

The Jaguar I-PACE is Jag’s first all-electric, seriously desirable SUV, and it’s in high demand.

Developed as a five-seater sports car, no design expense has been spared – inside or out. Complete with Touch Pro Duo infotainment system that boasts large touch screen controls, intelligent range projection, integrated Amazon Alexa and Jaguar’s InControl App inside. Outside, it offers Jaguar’s signature design, a range of up to 298 miles and 0-62mph in just 4.8 seconds - positioning itself squarely against rival Tesla.

Although the tax might seem high in comparison to other vehicles. The main thing to consider here is this is an all-electric model so you’ll be spending very little on things like fuel. Which means that road tax cost is easily off set by the cost saving in other areas.

Best Low Car Tax Small Cars


Renowned for being the cars with the lowest road tax and often the best in fuel economy (not to mention agility!) small cars have some big perks when it comes to road tax costs for drivers.

Volkswagen E-Up! – From £20,195 OTR
Annual Road Tax – £0

The smallest car of the VW family, the Up! has been updated for 2020 with an impressive trim, new safety tech and fantastic smartphone connectivity as standard. Perfect for young or first time car buyers, the E-Up! is stylish, nippy and packed with infotainment perks. Available in a three and five-door, this brand new all-electric is good for your bank balance and on the environment.

smart ForTwo - From £19,995 OTR
Annual Road Tax – £0

When it comes to small and mighty, the two-seater Smart ForTwo takes the crown for most eco-friendly city car. Enjoy an electric range up to 70 miles and a speedy acceleration of 0-62mph in just 11.6 seconds. Charge up to 80% in less than 40 minutes with a fast-charger and you’ll be back on the road in no time.

Buying your next car based on low car tax, is a great way to combat the escalating costs of running a car. Want to curb more running costs? Why not find out how much do electric cars cost to run  or follow our buying guide and future proof your next purchase

*Prices correct as of March 2020 and are subject to change.