Tips and advice

Classic car tax exemption: explained

Here’s what you need to know about the UK’s 40-year classic car tax exemption

No matter what you call it – car tax, vehicle tax or VED (vehicle excise duty) – most car owners in the UK have to pay to keep their car on the road. However, classic cars are currently exempt.

The date to remember is 1 January 1981: if your car was built before then, it’ll be exempt from vehicle tax from April 2021. If you don’t know when your car was built but you know it was registered before 8 January 1981, the same rule applies. This exemption is rolling, so from 2022, the dates will change to include those cars registered in 1982.

Cars that qualify as historic, and therefore don’t pay tax, are also exempt from MOT testing. However, driving a car in an unroadworthy state is still an offence that can land you with heavy fines, so many owners still take their cars for an MOT to make sure they’re up to scratch.

Read on for everything you need to know about classic car tax exemption.

Why don’t historic vehicles have to pay road tax?

A huge majority of classic cars are owned as a second car, used only on weekends and holidays. If they were to be taxed like newer cars, it might raise the cost of ownership to the point where only the rich could afford to keep them.

According to the Federation of British Historic Vehicle Clubs (FBHVC), which is as close to an historic vehicle governing body as we have, the classic car industry in the UK is said to be worth around £4bn per year to the economy. Thanks in part to the campaigning by the FBHVC, the rolling exemption has been reinstated.

The UK has had a 25-year rolling tax exemption in place for classic vehicles in the past but this was abolished in 1997 by the incoming Labour government. In the intervening years the 1972 cut-off for the classic car tax exemption remained in place, until 2014 when plans were announced to reintroduce the rolling 40-year exemption. During the 2015 budget, these plans were confirmed, to the joy of many enthusiasts.

My car is over 40 years old, is it automatically tax-free?

The short answer to that question is no. Most owners will have already done this if you’re buying a classic car made before 1 January 1981 but it’s not too difficult to sort yourself. 

You simply need to fill in section 7 of your V5C registration document to change vehicle class from PLG (Private Light Goods) to Historic. You must then visit a local post office, along with your valid MoT certificate and a completed V10 tax request form. The post office will check everything, and then process your request. This is a free service; if your car is currently taxed, you will be issued a refund for the full remaining months.

If the car was built more than 40 years ago, but was for some reason first registered in later years due to importation or sitting around in a dealership for a few months, the process of applying for historic vehicle status is slightly more involved. In these cases, you must prove to the DVLA the build date, which can usually be done with an original build sheet from the manufacturer – or with help from the myriad owners’ clubs. 

There may be a cost involved with this, and you should weigh this up against the cost of the car’s VED. In most cases, it’s more cost effective to find proof of the build date. It should also be noted that the vehicle only becomes VED exempt as of the beginning of the financial year, on 1 April. 

When it comes to driving your classic on the road, you must still go through the process of taxing your car – either online, over the phone or at your local post office, although you won’t have to pay anything.

How long can this tax exemption last?

In 2014, the Government brought in the rolling tax exemption scheme. However there’s no guarantee that this won’t change in the coming years. All the signs point to this becoming a permanent fixture though, which should be great news for owners of early-1980s classics, who can look forward to tax-free motoring in the coming years.

Although the financial incentive is significant enough, historic status for classic vehicles will also protect drivers in the future. For example, historic vehicles are exempt from the London Ultra Low Emission Zone, which was introduced to prevent older, more polluting vehicles from being used in the capital.

Read why the Jaguar E-Type is the greatest-ever classic car

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