In a significant win for motoring heritage, the Labour government has confirmed that the cherished Vehicle Excise Duty (VED) exemption for classic cars over 40 years old will continue. The move, outlined in the recent Budget report, safeguards the status of an estimated 350,000 historic vehicles across the UK.
Budget Confirmation and Future Review
The exemption, which spares owners of qualifying classic cars from paying annual road tax, was maintained following the Budget announcement. However, the Chancellor included a note of caution, stating that the policy is not guaranteed indefinitely and will be subject to review in the coming years. This provides temporary certainty for the classic car community while leaving the door open for potential future changes.
Industry Leaders Welcome the Decision
The decision has been warmly received by key figures in the historic vehicle sector. Dale Keller, CEO of the Historic & Classic Vehicles Alliance (HCVA), welcomed the move, arguing that applying VED to these vehicles would be "disproportionate".
"Preserving the exemption aligns with the government’s wider environmental goals," Keller stated. He emphasised that classic cars have a negligible lifecycle carbon impact compared to manufacturing new vehicles and are typically used sparingly as items of heritage. "The tax contribution of these vehicles was made decades ago," he added.
Mark Roper, Managing Director of Hagerty UK, a classic car insurance specialist, highlighted the sector's economic value and sustainability. He expressed concern that classics are sometimes viewed "unfairly" in the age of electrification.
"These vehicles represent the ultimate in recycled and sustainable motoring," Roper explained. He pointed to the industry's substantial footprint, noting it is worth £7.3 billion, contributes £3 billion annually to the economy, and supports over 100,000 jobs.
The Wider Transport Tax Landscape
The news for classic car owners comes alongside other major shifts in motoring taxation. The government has announced the introduction of pay-per-mile charging for Electric Vehicles and Plug-in Hybrids from 2028, a move designed to recoup lost fuel duty revenue.
Road assistance provider The AA commented that "drivers are at a fork in the road," with these significant tax changes for EV owners announced concurrently with freezes on traditional fuel duty. This creates a complex and evolving fiscal picture for all motorists in the UK.
For now, owners of historic vehicles can breathe a sigh of relief, with the valued tax exemption secured for the immediate future, preserving a key incentive for maintaining the UK's rich automotive heritage.
