Tips and Advice

Classic car tax exemption: explained

Don’t quite understand the 40-year classic car rolling tax exemption? Here’s what you need to know

In the UK, cars that were manufactured before 1 January 1978 are classified as historic vehicles. The good news for owners of these cars is that the classic cars are exempt from paying any form of vehicle excise duty. Here’s everything you need to know about the system.

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

For many enthusiasts, the burden of funding a classic car, generally a second or third car that is not used for daily driving, is somewhat eased by the fact many older historic models are no longer required to pay annual road tax.

According to the Federation of British Historic Vehicle Club, which is as close to a 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 to the campaigns of the FBHVC for the reinstatement of the rolling exemption, to help encourage the continued growth and evolution of the substantial industry, as well as the preservation of this important part of the UK’s industrial heritage.

Originally the UK had a 25-year rolling tax exemption in place for classic vehicles, however 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 re-introduce 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 eligible?

Not quite. If your car was first registered before January 1 1978, then it is a simple case of filling 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 however 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 clubs. There may be a cost involved with this, and you should weigh this up against the cost of 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 will not have to pay anything.

The future?

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 mid to late-1970s classics, who can soon 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, it has already been confirmed that historic vehicles will be exempt from the proposed London Ultra Low Emission Zone, designed to prevent older more polluting vehicles from being used in the capital.

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