Less than £20 a year to tax? Which car to choose.

Last Updated on: 22nd November 2023, 04:43 am

As the debate around the cost of driving rages on, it’s worth remembering that there has almost always been an annual cost just to own a car for use on the road. It’s still referred to as road tax by many drivers, as it was introduced as a means of supporting the road network – it evolved into the current Vehicle Excise Duty we pay today.

Current cars attract relatively low costs after a year of higher rate (or five years, for cars over £40,000 – check out the current rates on the gov.uk website), but for 2nd hand cars registered before March 2017, you can find some with zero-rated VED and some that cost just £20 per year. Tax rates based on vehicle emissions have been used to encourage buyers into greener, cleaner options since 2001, and the bonus is that to get the lowest emissions your first stop is to improve economy. These £20 tax bracket cars are all great on fuel.

So far the government has adhered to the bands in place when the cars were registered, too, rather than retrospectively applying harsher taxes to high polluters; this means you’re probably save relying on the low VED for a few years yet.

What kinds of cars attract the £20 tax rate?

Unsurprisingly, the cars you’ll find here are among the smallest on sale, though a couple of them are more than capable of regular family use. Not all models in the range will be low tax, either, some will need to be a specific model or engine.

When searching for cheap tax 2nd hand cars, make sure to note the date of first registration and the CO2 to check the latest rates.

What’s the best £20 tax car to buy?

1: Kia Rio 1.4 CRDi – 2011-2017

If you want the most space for your low-tax motoring, the Kia Rio is the one to have. It’s economical, roomy and will often have been well looked after, thanks to the long warranty and more responsible buyer profile compared to trendier, sportier models. If you live in London, aim for 2015-on models to avoid issues with ULEZ compliance, but otherwise this is a sensible, pragmatic choice that should deliver low costs for years to come.

2: Skoda Fabia 1.6 diesel – 2009-2014

If you want to have your cake and eat it, the Fabia is a fantastic option. It will attract ULEZ charges so it’s one for drivers outside of cities, but what a place to enjoy it. Refined and sharp handling for the size of car, high-quality interior materials and a punchy, torquey engine that delivers more in-gear performance than you’d ever expect while getting nearly 70mpg. There are a few rough ones about, so look to the newest models.

3: Ford Fiesta 1.4 TDCi Edge – 2008-2017

You can be forgiven doing a double take at the date – yes, this style of Fiesta is now 14 years old. It romped home with Parker’s ‘Best Used Car’ award in 2022 and remains a safe all-round choice, though you should look carefully at the service history to ensure oil changes and emissions maintenance have been kept up to date. It handles well, it looks good, and like all Fords it’s designed for the majority of people to find easy to drive and easy to live with. You won’t regret this one.

Anything else to consider?

You’ll get the Peugeot 108, Citroen C1 and Toyota Aygo trio in this tax band, but they’re crude and basic and generally haven’t aged well. You’ll also find the Honda Insight hybrid, which might be a nicer option for longer motorway drives but is a rare car, having lived in the shadow of the Prius. You could also take a look at cars with no tax to pay at all; a surprising variety enjoyed the zero-VED rate including the 2010-2013 Citroen C3 Airdream+.

Ultimately though, the annual tax cost is just one of many places where your car is emptying your bank account, so if you can’t find the right one in this tax bracket you may save money elsewhere by choosing cars with popular, low-cost tire sizes, longer service intervals, or lower cost spare parts. Before buying any used car check the MOT history online – if you see advisories for wear and tear items on the most recent MOT you’ll need to budget for those repairs even if the tax is cheap!

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