Chancellor Rachel Reeves has officially confirmed that classic cars aged over forty years will retain their valuable exemption from Vehicle Excise Duty (VED) under new bands set for 2026. The announcement, made in the Autumn Budget, safeguards a long-standing tax relief for vintage vehicles amidst a series of other fiscal changes.
Industry Leaders Welcome the Decision
The confirmation has been met with widespread approval from key figures within the classic car sector. Dale Keller, CEO of the Historic and Classic Vehicles Alliance, welcomed the move, stating it supports broader environmental objectives.
"Preserving the exemption aligns with the Government's wider environmental goals through maintaining vehicles whose lifecycle carbon impact is negligible compared to the manufacture of new vehicles," he said.
Mr Keller further elaborated that research indicates classic vehicles are used sparingly as cherished pieces of industrial and design heritage. He emphasised that the tax contribution for these vehicles was made decades ago, and applying VED now would be disproportionate to their limited use.
A Boost for a Multi-Billion Pound Industry
Mark Roper, Managing Director of Hagerty UK, also praised the decision, highlighting its significance for both owners and the wider economy. He noted that the news, alongside the continued freeze on fuel duty, is very welcome for an industry that contributes over £3 billion in direct taxes to the UK economy annually.
"Many organisations would like to see an annual roadworthy test for older vehicles, and many classic vehicle owners choose to continue with a yearly MOT test despite exemption, as being assured of their continued roadworthiness is something to be welcomed," Mr Roper added, addressing ongoing road safety considerations.
How to Apply for VED Exemption
For owners looking to benefit from this exemption, the process is straightforward. You can apply to stop paying for vehicle tax from 1 April 2025 if your vehicle was built before 1 January 1985.
It is crucial to remember that you must still officially tax your vehicle even if you do not have to pay any fee. If the exact build date is unknown, you can still apply for exemption if the vehicle was first registered before 8 January 1985.
The exemption applies to a range of vehicles, including:
- Cars and vans
- Motorcycles
- Tricycles
