Low-tax cars

Since 2005 car tax has been based on CO₂ emissions for cars registered before March 2010, or engine size for cars registered before March 2001. To further encourage the use of low-carbon models, in 2010, a CO₂-dependent ‘first year’ rate was also introduced for all new cars during the first year of ownership.

For cars registered from 1st March 2001 to 31 March 2017, car tax bands are labelled by a letter, with A referring to cars with CO2 emissions up to and including 100 g/km. Tax bands B to L relate to vehicle emissions between 101 and 255 g/km, each band having a range 10-15 g/km. The highest tax band is M for cars with CO2 emissions more than 225 g/km. If you are looking to save a bit of money on car tax, then you will be best off looking for a car with a lower CO₂ band.

For cars registered from 1 April 2017 a ‘first-year’ tax rate (FYR) applies to new cars during the first year of ownership with a standard rate payable from the second year onwards. New diesel cars registered from 01 April 2018 not meeting the real driving emissions step 2 (RDE2) standard for air quality (NOx) also have to pay a FYR supplement to the effect that these cars go up by one VED band.

Zero-emission cars are zero-rated for FYR, with ultra low emission vehicles (ULEVs) charged £10-£25 depending on emissions. In practice, because all ULEVs are currently Alternatively Fuelled Vehicles (AFVs) – which include conventional and plug-in hybrids, biofuels, CNG and LPG – ULEVs receive the £10 AFV discount on the FYR and Standard Rate.

For cars registered before March 2001, CO₂ emission data is generally less available. As a result, car tax is charged according to engine size as measured in cubic centimeters or ‘cc’.

Current rates for cars in this category are £155 for engines up to 1549cc and £255 for engines of 1550cc or larger.

For more information about low-tax vehicles please visit next greencar.