Low Car Tax Vehicles: First-Year VED, EV Changes, and Exemptions

The cheapest cars to tax in the UK are low-emission models registered between 1 March 2001 and 31 March 2017, which sit in Band A or B and cost just £20 a year for the life of the vehicle. Zero-emission electric cars come next: £10 in the first year, then £200 annually, the same flat rate paid by nearly every other car registered since April 2017. Which system applies to a car, and therefore how cheap it can be, depends almost entirely on its first registration date and its CO2 figure.¹

The Lowest Annual Rates You Can Get

If the goal is the smallest possible yearly bill, a pre-2017 car in the lowest CO2 bands is unbeatable. Cars first registered between 1 March 2001 and 31 March 2017 stay on the original lettered band system, and the bottom bands are genuinely cheap:²

Band A (up to 100 g/km): £20 a year
Band B (101–110 g/km): £20 a year
Band C (111–120 g/km): £35 a year

Small-engined petrol cars, efficient diesels, and early hybrids from that period often land in these bands. An electric car registered in the same window also pays £20 a year, which puts older EVs among the cheapest vehicles on the road to keep taxed.¹

Once you move above Band C, rates climb quickly: Band D is £170, Band E is £200, and it rises from there. For rock-bottom tax, the target is a car under 111 g/km registered before April 2017.

Buying New: Why the First Year Is What Matters

For any car registered on or after 1 April 2017, VED works in two parts. The first year is priced by CO2 emissions, and the gap between clean and dirty is dramatic. Every year after that is a flat standard rate.

First-year rates for 2026/27, for petrol cars and RDE2-compliant diesels:³

0 g/km: £10
1–50 g/km: £115
51–75 g/km: £135
76–90 g/km: £280
91–100 g/km: £365
101–110 g/km: £405
111–130 g/km: £455
131–150 g/km: £560
151–170 g/km: £1,410
171–190 g/km: £2,270
191–225 g/km: £3,420
226–255 g/km: £4,850
Over 255 g/km: £5,690

Diesels that do not meet the RDE2 standard pay the rate one band higher. A non-RDE2 diesel emitting 131–150 g/km, for example, pays £1,410 rather than £560, so it’s worth confirming RDE2 compliance before signing anything.³

The CO2 figure that decides the band is on the V5C registration document and on the certificate of conformity handed over at purchase.

What You Pay After Year One

From the second year onward, almost every car registered since April 2017 pays the same £200 standard rate, whether it emits 50 g/km or 250 g/km. Petrol, diesel, hybrid, and electric all sit on the same flat line.³

That’s why, for post-2017 cars, choosing a low-emission model saves you real money once, in year one, not year after year. The only way to get consistently cheap annual VED on a modern car is to buy used, past the first-year rate, and pay someone else’s £200.

Electric and Hybrid Cars After April 2025

Electric cars lost their VED exemption on 1 April 2025. A newly registered zero-emission car now pays £10 in its first year and £200 a year after that. Electric cars registered between 1 April 2017 and 31 March 2025 skipped the first-year rate entirely (they were exempt at the time) and now pay the £200 standard rate. Older electrics registered between 1 March 2001 and 31 March 2017 pay £20 a year.¹

Plug-in hybrids and cars converted to run on LPG used to receive a £10 discount off the standard rate. That discount is gone. Hybrids registered on or after 1 April 2017 now pay the full £200. Hybrids registered before April 2017 still follow the older CO2 band system, and their lower emissions often place them in Bands A to C.¹

Watch the £40,000 List Price Threshold

Any car with a list price over £40,000 when first registered picks up the Expensive Car Supplement: an extra £440 a year for five years, starting from the second licence. Added to the £200 standard rate, that brings the annual bill to £640 for years two through six.³

List price includes factory-fitted options, not just the base price of the model. A car with a base of £38,000 can cross the threshold once extras are added, so check the total list price on the V5C. Zero-emission cars get a higher threshold of £50,000, which matters given how many EVs are priced in the £40,000–£50,000 range.¹ The supplement follows the car, not the owner: a second-hand buyer inherits whatever years are left on the clock.

Cars That Pay No Tax at All

The cheapest tax is no tax. Cars built before 1 January 1986 qualify for free VED from 1 April 2026 under the rolling 40-year historic vehicle exemption. The cutoff moves forward every year. You still need to tax the vehicle through the normal process; the cost is simply zero.⁴

Free tax is also available on disability grounds if you receive the higher or enhanced rate mobility component of Personal Independence Payment, Disability Living Allowance, Armed Forces Independence Payment, or War Pensioners’ Mobility Supplement.⁵

Keeping the Bill as Low as It Can Be

Once you’ve chosen a car in a cheap band, one small thing still moves the number. Paying VED annually upfront carries no surcharge. Paying monthly or six-monthly by Direct Debit adds 5%, so a £200 standard rate becomes £210 across the year in monthly instalments.⁶ On a £20 pre-2017 band, the same 5% is a rounding error, but on higher rates it adds up.

If a car isn’t being used on the road, a Statutory Off Road Notification (SORN) removes the obligation to pay VED entirely. The car cannot be driven on any public road until it’s taxed again, but for a second vehicle sitting on a driveway, a SORN drops the annual cost to nothing.⁷

1
GOV.UK. Vehicle Tax for Electric, Zero and Low Emission Vehicles
2
GOV.UK. Vehicle Tax Rates – Cars Registered on or After 1 March 2001
3
GOV.UK. V149 – Rates of Vehicle Tax April 2026
4
GOV.UK. Historic Vehicles – Vehicles Exempt From Vehicle Tax
5
GOV.UK. How to Apply for Free Disabled Tax
6
GOV.UK. Vehicle Tax Direct Debit Payments – Set Up a Direct Debit
7
GOV.UK. Register Your Vehicle as Off the Road (SORN)