52 Ways to Save Tax #6

In the next part of our series ‘52 Ways to Save Tax’ we look at a way that you can both save tax and help the environment. Keep reading to find out how driving a more eco-friendly car can not only help protect the planet but can also save you money.

52 Ways to Save Tax – Part 6: Drive A Greener Car

If your car was first registered before March 2001 then your road tax is determined by the engine size of your car. However, if your car was first registered after March 2001 then the amount of road tax that you pay will depend on its exhaust emissions.

Since 2001, the road tax that you pay on a car depends primarily on its CO2 emissions. You can establish a car’s CO2 emissions in one of two ways:

  • If you own the car then this information is on your Registration Certificate (the V5C form)
  • If you don’t own the car you can ask your dealer or you can head online to the DVLA website to check out which band a certain make and model will fall into

In simple terms, the lower your car’s CO2 emissions, the lower your tax bill. Cars which have very low emissions (under 121g/km) pay a very low rate of tax (up to £30 in tax year 2014/15). However, if your car pumps out lots of CO2 then you may end up paying several hundreds of pounds a year in road tax.

Choose a car in a low band to reduce your tax bill

If you want to reduce your tax liability it can pay to buy a car with low emissions. You’ll pay very little tax on cars in bands B and C. And, cars in band A – with CO2 emissions of under 100g/km – don’t attract any tax at all.

Cars that you can choose in these low bands include:

  • Band A – Some versions of the Ford Fiesta and Fiat 500, VW Polo Bluemotion, Audi A1 diesels, Hyundai i10, i20 and i30 diesels, Nissan Leaf,
  • Band B – Differently engine versions of the cars in Band A plus some versions of the Vauxhall Corsa and Astra, Diesel and EcoBoost versions of the Ford Focus, Nissan Note, Audi A3 2.0 TDi
  • Band C – Appropriately powered versions of the SEAT Ibiza, Skoda Yeti, Nissan Qashqai, Ford Mondeo, Mazda CX-5 and BMW 5-series

Save money on first registration

As well as reducing your tax bill on an annual basis, choosing a car with low emissions can help you avoid a significant tax bill on first registration.

In the 2014/15 tax year, any new car with CO2 emissions of under 131g/km does not attract any vehicle tax on first registration.

If you consider that a car which produces over 255g/km of CO2 incurs a tax bill of £1,090 on first registration, you can save hundreds of pounds in tax by buying a more environmentally friendly model.

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