When RIFT customers talk about what they spend their yearly tax refunds on, new wheels are always high on the list. When you’re buying a car, whether for work or the family, there’s more than just the price on the windscreen to think about. Spare some thought for what you'll be paying to keep it on the road, too.

Cost of Fuel

For one thing, there’s the type of fuel you’ll be filling up on to consider. The whole car industry’s on a long, slow road toward more ecologically friendly fuel choices now, so you've got a few options here. Whether you’re looking at conventional petrol and diesel or making the leap to hybrid or fully electric models, keep your wits about you. There's some dodgy information flying around and it's easy to get tripped up.

There’s a general assumption that diesel's going to be more efficient than petrol, but you still might not feel much benefit at the pump. When a car's efficiency is tested, it's generally done under pretty tight controls in a laboratory. You're not exactly dealing with real-world road conditions there, so you probably won’t get the same performance on the road. In fact, your actual fuel efficiency could easily be as much as 20% less than the lab-coat boffins' guesswork. That doesn't mean you're automatically better off with standard petrol, of course. Still, it's worth knowing that a lot of modern cars are designed to pass scientific tests, rather than do the business under “real-world” conditions.

Electric Vehicles

Electric vehicles are still really just taking their first baby-steps out of the garage, so you've got a few things to weigh up. No, they don't usually cost a lot to run - but you'll be dropping a serious chunk of change to buy one right now. The government's “plug-in grant” scheme could take some of the sting out of that, if you’re eligible for it. It’s basically a discount on the asking price of low-emission vehicles, so you could get a discount worth up to £3,000 off the price of a qualifying car. If you're buying a qualifying van, you could get up to £8,000 by going plug-in. Better yet, you don’t even need to do anything to take advantage of this. Your dealer should just include the grant in the overall price.

Vehicle Excise Duty (VED)

When it comes to Vehicle Excise Duty (VED), you’re dealing with an ever-shifting landscape of rates and thresholds. Overall, though, the amount you’ll find yourself paying depends on:

  • When your vehicle was first registered.
  • The type of fuel it uses.
  • Its CO2 emissions.

You can find the full VED rules and figures on the HMRC website. The calculations here can get pretty complicated when you're comparing your options. Take your time and get your sums right. That CO2-belching sports monstrosity might look the business on the forecourt. It won't seem so pretty when it's choking the life out of your wallet, though.


The other thing you need to keep front and centre in your mind is insurance. Look into the safety options your new vehicle comes with. If you can, consider even splashing out on a few optional ones as well. Yes, you’ll be coughing up a little extra up-front. On the other hand, you'll be saving on insurance costs later – and maybe even protecting your family’s lives along the way. Car insurance is a messy business, with a 50-point checklist determining what you'll be paying. Tick a few extra safety boxes now and you might end up saving more than just money.

While we're talking about insurance, don't just take a running leap at the first quote you're offered. Always shop around for the best deal before laying your cash down. There are some pretty decent comparison tools online to save you a bit of legwork here, so take your time. There are even a few extra tricks to bring your premiums down, like capping your mileage or fitting a tracking device.


The costs don’t stop once you’re safely on the road, either. You might be able to get a bundle deal that includes some maintenance to help keep you rolling. Again, it’s about accepting a few extra costs at the start to avoid coughing up a lot more later. Keeping your car in good shape will go a long way toward preserving its value. When the time comes to trade up again, you'll want to have something worth selling to offset the cost.

There are lots of ways to bring down the running costs of your car, whatever kind you buy. Even small steps can help, like not carting heavy loads around when you don't need to. The most important step of all is to keep track of the work mileage you’re doing. Tax refunds are a huge boost when you're laying down cash for a new car, and RIFT is your best bet for getting back everything you’re owed. You’ve got to keep filling up for work, so it only makes sense to pump a little something back into your bank balance with the UK’s leading tax experts.

RIFT are the UK's leading tax rebate and tax return experts who've been in the industry since 1999. Wondering if you're due tax back? Check out free tax rebate calculator for an instant estimate of how much you could be owed.