Your first car is often the one where road tax costs matter most — budget-conscious buyers need every saving they can get. Choosing a low-VED vehicle as your first car sets good financial habits and reduces ongoing costs.

The Cheapest Cars to Tax

Zero-emission electric cars are the cheapest to tax at just £10 per year from year two. However, a used electric car within budget may be harder to find than a low-CO2 petrol. Look for cars with official CO2 emissions under 120g/km — these fall into lower first-year VED bands and pay lower standard rates. A petrol car at 110g/km costs £155 first year and £190 standard — versus £540 for a 180g/km equivalent.

Small Hatchbacks: The Best Value

Small hatchbacks like the Ford Fiesta, Vauxhall Corsa, Volkswagen Polo and Toyota Yaris offer the lowest VED in the new car market. Most emit between 100-125g/km, placing them in the £155-£205 first-year band. Standard rate from year two is £190 for all. These cars are also cheap to insure — a key consideration for new drivers — making them the best overall value first car choice. The total cost of ownership is lowest in this segment.

Used Cars: Skip the First-Year Rate

Buying a used car that is already past its first-year period means you skip the first-year VED cost entirely. A three-year-old Ford Fiesta costs just £190 per year in VED. Over five years, you pay £950 in VED versus £1,165 if you bought new (first-year £155 + four years standard £950). The saving of £215 compounds when combined with the lower purchase price of used cars. Used is financially smarter for most first car buyers.

Electric First Cars

As used electric car prices fall, an electric first car is increasingly realistic. A three-year-old Nissan Leaf or Renault Zoe costs £10 per year in road tax. Insurance costs for EVs are slightly higher than equivalent petrol cars for new drivers due to repair costs, but the VED saving of £180 per year versus a petrol equivalent helps offset this. Use the car tax calculator at Cartax.online to compare VED across your shortlist of first cars.

What to Avoid for First Cars

Avoid high-CO2 performance cars as a first car — the combination of high insurance, high first-year VED and premium rate surcharges makes them very expensive to run. Also avoid pre-2015 diesels if you drive in urban areas — they may fail ULEZ and clean air zone standards, costing hundreds per year in daily charges. A sensible low-CO2 hatchback gives you the best balance of low VED, low insurance and low running costs.