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Ten surprisingly tax-free cars

Kwik Fit | Tuesday 5th August 2014 7:00am

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As motoring costs spiral, making savings wherever you can is more important than ever.

Paying little or no tax is one area you could consider when buying your next car, and you donít have to buy a small electric city car to avoid paying tax - thereís more choice than you think.

Vehicle excise duty (VED), commonly known as road tax or car tax, is based on how environmentally-friendly a vehicle is. You don't have to buy a small electric city car to avoid paying tax - there's more choice than you think.

There are 13 tax bands with costs ranging from £0 (for Band A cars) to £1,090 for Band M* gas-guzzlers (£500pa from year 2).

Band A (CO2 emissions up to and including 100g/km) is packed with pure electric cars such as the Nissan Leaf, Renault Zoe, Volkswagen e-UP! And the BMW i3, but there are a few surprises too.

Read the Money Advice Service guide: Car tax bands explained

More miles per gallon from plug-in hybrids

Band A also includes hybrids (cars that combine a conventional petrol or diesel engine with an electric motor).

You may be surprised to learn that a large luxury car like the £89,3278 Porsche Panamera 3.0 S E-Hybrid Tiptronic S (includes £5,000 government plug-in car grant) qualifies for £0 car tax.

The big 4x4 Mitsubishi Outlander PHEV 2.0 GX3h Auto, another plug-in hybrid, also fits into Band A.

However, itís worth delving into the detail and looking at the total cost of motoring for any new car before splashing out.

To find out how much you are spending on your car, use the Money Advice Service's simple Cost of Motoring tool.

For instance, the Porsche Panamera has a range of up to 22 miles when relying on electric power, but may only do around 30-40mpg when running on petrol.

The Panamera is also in the highest insurance group and will depreciate by as much as 50% after three years based on driving 10,000 miles a year, according to Parkers.co.uk.

The Mitsubishi Outlander PHEV, which costs from £28,249 (includes £5,000 government plug-in car grant) is theoretically capable of 148mpg, and can run on pure electric for 32.5 miles.

However, the miles per gallon will drop to closer to 40 when the 2.0-litre petrol engine is used, while depreciation could be as high as 49% after three years.

For motorists living in London, both cars are exempt from the £11.50 per day congestion charge.

Economical, clean diesels

Fuel efficient, low emission new diesel cars, including the Citroen C4 Picasso 1.6 e-HDi Airdream VTR 5dr ETG6, which is a large MPV, also pay no congestion charge.

The Peugeot 308 2.0 BlueHDi Active 150 Stop-Start, is also Band A, despite its relatively large diesel engine.

Both cars are capable of 74mpg, but again, you should look at the total cost of motoring, taking depreciation, insurance and other running costs into consideration.

Use this simple Car cost calculator or read the guide: Choosing between petrol and diesel power

Our Top 10 Band A surprises

  1. Porsche Panamera 3.0 S E-Hybrid Tiptronic S - 71g/km of CO2, 91mpg
  2. Mitsubishi Outlander PHEV 2.0 GX3h Auto - 44g/km, 148mpg
  3. Citroen C4 Grand Picasso 1.6 e-HDi VTR Airdream 90hp ETG6 - 98g/km / 74mpg
  4. Mercedes-Benz B-Class B 180 CDI ECO SE - 98g/km, 74mpg
  5. Vauxhall Insignia Hatch 2.0 CDTi Design 120PS ecoFLEX Start/Stop - 98g/km, 76mpg
  6. Renault Captur 1.5 dCi Expression 90 Stop and Start - 95 g/km, 79mpg
  7. Skoda Octavia Estate 1.6 TDI CR SE 105PS 4x4 - 99 g/km, 74mpg
  8. BMW 1 Series 116d EfficientDynamics - 99 g/km, 74mpg
  9. Volvo V40 2.0 D4 190HP SE - 99 g/km, 74mpg
  10. Peugeot 308 2.0 BlueHDi Active 150 Stop-Start - 99 g/km, 74mpg

This article is provided by the Money Advice Service.

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