Government Reviews Classic Car Tax Relief
The Labour Party government has broken its silence on a potential overhaul of the car tax system, specifically addressing calls to abolish the long-standing Vehicle Excise Duty (VED) exemption for classic and heritage vehicles.
This development came after Liberal Democrat MP Ben Maguire submitted a written parliamentary question, directly asking the government if it had considered changing the rules.
What the Treasury Minister Said
In a definitive response, Treasury minister Dan Tomlinson stated the government's position. He confirmed that the government annually reviews the rates and thresholds of taxes and reliefs to ensure they remain appropriate and reflect the current economic climate.
Mr Tomlinson added that final decisions on all tax policy matters, including VED, are made by the Chancellor during fiscal events, taking the state of the public finances into full account.
Understanding the Current VED Exemption Rules
Under the existing regulations, a significant tax benefit is in place for owners of older vehicles. Vehicles built or first registered before 1 January 1985 are currently exempt from paying VED.
This exemption is set to be updated in 2025. From 1 April 2025, if your vehicle was built before 1 January 1985, you can stop paying vehicle tax. If the exact build date is unknown, but the vehicle was registered before 8 January 1985, it will also qualify for the exemption from that date.
However, drivers must take action to benefit from this. You must apply for a vehicle tax exemption, a process also known as putting a vehicle into the 'historic tax class'. This is not an automatic process.
This historic vehicle status also links to MOT requirements. You do not need an MOT for a vehicle if it was built or first registered over 40 years ago, provided no 'substantial changes' have been made to its core components like the chassis, body, axles, or engine in the last 30 years.
It is crucial to note that while the MOT requirement lapses, the legal obligation to keep the vehicle in a roadworthy condition remains. Failure to do so can result in a fine of up to £2,500 and 3 penalty points on your driving licence.
