Home / Car News / Buying a New Car: Are There Any Tax Benefits for Going Green?


When purchasing a new car, it’s important to consider all of your options to help make sure you’re making the savviest investment possible. Going green offers new car owners a whole range of benefits; here we take a look at some of the tax benefits associated with purchasing a low emission vehicle.

Road tax

Road tax, on cars registered after 2001, is based on the CO2 emissions of a vehicle. Greener cars, therefore, have a great potential for savings to the consumer, as their CO2 emissions are much lower than those of more traditional cars.

With CO2 emission levels of hybrid cars often up to 25 per cent lower than their fuel counterparts, the consumer could save up to £100 per year on road tax, while there is absolutely no road tax to be paid on electric cars.

The savings on road tax, along with cheaper insurance, as well as the ready availability of excellent car finance in the UK, contrive to make going green an extremely savvy investment for the budget conscious consumer.

London congestion charging discount

On 23 April, 2013, the Mayor of London announced that a new Ultra Low Emission Discount (ULED) would become enshrined in law, from 1 July 2013 onwards; the ULED replaces the old Greener Vehicle Discount (GVD) and Electric Vehicle Discount (EVD).

The ULED will make all electric vehicles and ultra-low emission cars and vans – defined as those vehicles emitting 75g/km or less of CO2 – exempt from the London Congestion Charge. This change to the way in which the Congestion Charge is applied will potentially save those who regularly drive within the capital hundreds of pounds each year.

Benefits for companies

The tax benefits associated with going green when purchasing a new car are not merely confined to the private ownership of vehicles.

Under the UK Government’s Enhanced Capital Allowance (ECA) scheme, businesses who invest in vehicles that emit less than 95g/km of CO2 are able to claim a 100 per cent first year capital allowance on their investment, against the taxable profits of the period of investment.

Investing in greener vehicles can, therefore, offer companies a very real and immediate saving in terms of corporation tax within the first year.


For any new car owner, one of the most important costs to factor into any purchasing decision is the cost of fuel, one of the most heavily taxed aspects of car ownership; in this regard, investing in electric vehicles especially offers an extremely lucrative saving.

According to statistics published by the Society of Motor Manufacturers, the cost of charging an electric vehicle is on average just 3 pence per mile, compared to the average cost of 16 pence per mile to run a petrol or diesel car. Over a period of just one year, assuming that you drive 12,000 miles, the average according to most insurers, this represents a saving of £1,560.

Making the sensible choice

When choosing a new car, the tax benefits associated with the ownership of a green car should not be your sole concern – it’s imperative also to consider its practicality. However, with the government’s increasing focus on combating climate change, from a purely financial point of view, investing in a green car means it’s likely you’ll see your taxable benefits grow each year.


About the author: Ahmad Wali


Ahmad Wali is associated with automotive industry from past 4 years. Also the member of the Cars Edition Magazine and critique for latest car reviews. Apart from Automotive industry he is an Entrepreneur running blog network including UK eBest Cars. Say Hello on twitter


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