Car tax is one of the most visible ways motorists pay the government for the use of their car. Like many taxes, Vehicle Excise Duty (VED)or ‘road tax’ isn’t straightforward. Since 2001 it’s been based on the carbon dioxide emitted by your car, but the rates change every year, and the rules keep evolving to adapt to electric technology and driver habits. Fortunately, low-CO2 used cars registered between March 2001 and April 2017 still qualify for £20 a year road tax.
Since 2017, a new scheme for VED means used cars pay a flat rate of road tax regardless of emissions. The penalty for high CO2 comes with the first year one-off charge paid by the owner who can afford the most for the car, buying it new – an attempt to make the tax fairer reflected by an enhanced rate applied for the next five years for cars over £40,000 new. Once the car is six years old, the rate of VED is the same.
However, VED was calculated differently before March 2017. Cars were placed into bands, using the grams of carbon dioxide emitted per kilometre expressed as g/km CO2. Some cars qualified for £0 road tax, while others only cost a budget-friendly £20. Happily, these cars still qualify under the road tax conditions at the time of registration.
The benefit of buying a used car in Bands A, B or C for VED is a substantial saving over the flat rate of £180 per year new cars pay – set to rise to £190 later in 2024, and likely to follow inflation thereafter. At the time of writing, Band B cars cost £20 a year to tax and the current plan is to remove the zero-rated VED category entirely from April 2025, but the cheaper rates are not being increased yet.
Buy the right used car and you could continue enjoying a car that costs £20 a year to tax for a few years to come. Here’s our pick of the low-tax used buys in 2024.
Best cars that cost £20 a year to tax
Editor's choice: Audi A3 1.4 TFSI S-tronic
Sporty hatch with strong image and many talents
Find an Audi A3 for sale near you
Manual cars tend to drop into Band C for £35 per year tax – and this is specification dependent, but you can tax a sporty 1.4 (CoD - cylinder on demand) S-line for £20. You won't be disappointed by the performance, handling or running costs, and there's no denying the A3's enduring appeal and upmarket image. While the A3s with the lowest VED are largely three-door models, the five-door A3 Sportback has a few options for £20 tax as well.
Problems to watch out for:
Suspension wear, timing belt changes and on older cars, failure of the retractable infotainment screen.
Pros
- Fuel-saving tech really works
- High build quality
- Relatively easy maintenance
Cons
- High demand, strong values
- Some expensive components
- Mild ASBO image in some colours
| Fuel type | Petrol |
| ULEZ compliant | Yes |
| Typical insurance group | 24 |
Volkswagen Golf 1.4 TSI GT or R-Line
Sensible family hatchback, minimal running costs
Find a VW Golf for sale near you
That just means it sits lower on our list, the Golf is still an excellent choice. As with the Audi position in bands B or C depends on spec, but there are more manual versions of the Golf with suitably low road tax. The 1.0-litre petrol models also qualify, but beware April 2017-on models. The Volkswagen Golf Mk7 was the 2023 Parkers Used Car of the Year.
Problems to watch out for:
Uneven tyre wear, front suspension bushes, noisy timing chain, skipped DSG gearbox services
Pros
- It's as good as the hype
- Later models are better
- Sensible costs all round
Cons
- Basic spec sparse
- Most Golfs are diesel
- A3 is better value used
| Fuel type | Petrol |
| ULEZ compliant | Yes |
| Typical Insurance group | 7-34 |
Ford Fiesta Mk7 1.4 TDCi
Ford's best-selling supermini is great – away from CAZs
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However, this one will attract charges for ULEZ or clean-air zones, so if you're driving in such areas you might want to check out the 2008-17 Ford Fiesta VED rates and look for the 1.0-litre Ecoboost. Why isn't that one in this list? Because it's in band A, and one of the best used cars with free road tax instead.
Problems to watch out for:
The diesel model is prone to injector leaks, failure of the dual-mass flywheel and blocked DPFs. It's also worth checking features like the heated windscreen still work when buying older, cheaper examples
Pros
- Massive dealer network
- Affordable maintenance
- Some advanced tech
Cons
- Diesel = ULEZ
- Rather dated audio
- High-mileage reliability
| Fuel type | Diesel |
| ULEZ compliant | No |
| Typical insurance group | 2 - 20 |
BMW 2 Series Active Tourer
The ultimate driving-to-school machine?
Search used BMW 2 Series Active Tourer cars for sale
Diesel models provide the lowest VED options, either 218d or 216d (there are some zero-rated models). The petrol versions fall into band C, so if you prefer the cheaper fuel it's only a small extra amount. For those who can park on the drive and plug-in, the 225xe hybrid is the ideal choice.
Problems to watch out for:
Timing chain noise, neglected services on ex-fleet cars, clocking before the first MOT.
Pros
- BMW interior, tech
- Good handling
- Distinctive style
Cons
- Firm ride
- Some quality issues
- Diesel longevity
| Fuel type | Diesel |
| ULEZ compliant | Yes |
| Typical insurance group | 11 - 24 |
Mercedes-Benz GLA 200 CDI (200 d)
Trendy upmarket small SUV, budget-friendly VED
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Check the VED rates for the Mercedes GLA range and you'll see most specifications of 200 CDI and early 200 d facelifted models are in band B, so there's plenty of scope for finding a specification and trim level that suits you.
Find a used Mercedes GLA for sale near you
Problems to watch out for:
It's one of the early generations of Euro 6 Mercedes, so issues with the NOx sensors and AdBlue (where fitted) are common. On later cars this can result in the inability to start if you ignore the warnings.
Pros
- Premium image
- Generous specification
- Not too big
Cons
- Patchy quality
- Emissions system bugs
- B-Class is more practical
| Fuel type | Diesel |
| ULEZ compliant | Yes |
| Typical insurance group | 19-42 |
Toyota Aygo (Citroen C1, Peugeot 107)
The 'Citybug' trio bring '60s simplicity in a modern car
The Aygo has a frugal yet feisty three-cylinder engine, ultra-low running costs and superior quality to most cars in its sector. The good news is that the Citroen C1 and Peugeot 107 sister cars are even cheaper to buy.
Search used Toyota Aygo cars for sale
Problems to watch out for:
These are simple cars, but because they're very affordable they don't always get the best maintenance. Check for bodged repairs, rust (particularly around rear axle and mounts), and look for a smooth, smoke-free engine with clean oil. Automatic models use an automated manual that is economical but unreliable.
Pros
- Reliable engine
- Spacious for size
- Very low costs
Cons
- Motorway refinement
- Plasticky trim
- Small boot
| Fuel type | Petrol |
| ULEZ compliant | Yes |
| Typical insurance group | 2-4 |
Peugeot 3008 Mk1
Distinctive, spacious MPV is cheap to buy and run
Find a used Peugeot 3008 for sale near you
Unfortunately for city-dwellers, the band B Peugeot 3008 is diesel powered – though you may find some2014-on diesels that are ULEZ compliant, so it's always worth checking the TfL website to verify a specific car. The cheapest VED petrol model is the 1.2 Puretech in band C.
Problems to watch out for:
Most of the low road tax models are the 1.6-litre HDi which is prone to leaking injectors and should have the DPF (diesel particulate filter) changed at 75,000 miles. Many owners ignore or bypass it, causing more problems at higher mileage. The 1.2-litre petrol is an early example of the wet-belt Puretech and can suffer from swollen timing belts, debris in the oil pickup and brake booster, and related issues.
Pros
- Very spacious
- Clever boot space
- High driving position
Cons
- Peugeot parts availability
- Neglected diesels
- Flawed early 1.2-litre petrol
| Fuel type | Diesel |
| ULEZ compliant | from around 2014 |
| Typical insurance group | 14-31 |
Kia Rio 1.25 ISG (2011-2017)
Generously sized budget hatchback is just grand(e)
Find a used Kia Rio for sale near you
If you want a ULEZ friendly one on a budget, look for the 1.25-litre ISG - it offers the cheapest petrol Kia Rio road tax. Likewise if you want free road tax (for now) the 1.1 CRDi is in band A and also very frugal, if a little slow.
Problems to watch for:
Mostly dents and damage – these cars had a generous warranty and owners were generally good at service history, but their low cost and urban appeal means they often bear the brunt of careless parking and unsympathetic road users. Clutches and gearboxes also wear relatively quickly.
Pros
- Family-sized supermini
- Kia build quality
- 1.4 CRDi unstressed
Cons
- Small engines
- Built to a price
- Not always cherished
| Fuel type | Petrol |
| ULEZ compliant | Yes |
| Typical insurance group | 8 |
Hyundai i10 (2014-2017)
Reliable, economical and well-equipped i10 is hard to beat
Find a used Hyundai i10 for sale
Hyundai i10 VED rates can go as high as band F for the robust, old-school automatic – but most 1.0 models are band B with a couple of band A versions as well.
Problems to watch out for:
Neglect, mostly. The Hyundai i10 is a well-made, carefully specified car that ages well.
Pros
- Reliability
- Well-packaged
- Quite sharp looks
Cons
- Still expensive
- Poor motorway refinement
- Thirsty automatic
| Fuel type | Petrol |
| ULEZ compliant | Yes |
| Typical insurance group | 1-7 |
Skoda Citigo
Sensible Skoda with sensible road tax as well
Nearly all pre-April 2017 Skoda Citigo VED rates are band B, with a couple of band A options if you want to pay no road tax at all – there's also a rare electric version, equivalent to the VW e-Up and Seat Mii Electric.
Find a used Skoda Citigo for sale near you
Boot space is better suited to a weekly shop than a grand tour, but the seats fold for a surprisingly useful boxy load space, and for driving in cities the agile handling and excellent visibility means no gap or parking space is denied.
Problems to watch out for:
Generally the Citigo is a robust and reliable car that will outlast most contemporary rivals, but the clutch wears quite quickly. The automatic option is an automated manual gearbox and best avoided – if you want a two-pedal Citigo, the Citigo iV/Citigo-e electric car is better.
Pros
- Well made
- Robust interior
- Cheap insurance
Cons
- Flawed automatic
- Basic infotainment
- AEB optional
| Fuel type | Petrol |
| ULEZ compliant | Yes |
| Typical insurance group | 1-4 |
Is buying a used low CO2 car really saving money?
If you’re looking at the overall cost of your car then generally, the low CO2 models are also the most economical and often the cheapest to insure. Wear and tear on a used car does mean extra costs for maintenance, but replacing all tyres, suspension bushes and even a clutch or DPF is unlikely to cost as much as a deposit and first year payments, or depreciation, on a new car.
The pitfall for clean-air zones and ULEZ is that many of the cheapest Band A or B used cars are diesel. Unless they meet Euro 6 standards they will incur a charge and may even be banned at certain times in the future. There are more petrol options if you choose Band B and look at smaller engines.
