Drivers may qualify for an exemption from paying car tax under certain conditions. Car tax, officially known as Vehicle Excise Duty, is typically an annual obligation, although there are options available to spread out payments. The standard rate for cars registered after April 2017, excluding the first-year rate for new vehicles, currently stands at £195 per year.
For cars registered between March 1, 2001, and March 31, 2017, there are varied tax rates. The rates range from £20 annually for vehicles emitting up to 100g/km of CO2 to £760 annually for vehicles emitting over 255g/km of CO2.
Individuals receiving certain disability benefits, like PIP, may qualify for up to 100% car tax exemption, especially if they receive the higher rates of benefit payments. Those receiving standard rates can expect a 50% discount. Exemption from car tax is limited to one vehicle at a time.
Additionally, vehicles utilized by organizations to transport disabled individuals are also exempt from car tax, excluding ambulances. Vehicles manufactured before January 1, 1985, are not required to pay car tax. Mobility vehicles and powered wheelchairs with a maximum speed of 8mph on roads and restricted to 4mph on footpaths are also exempt from tax.
If a vehicle is not in use and is kept off public roads, owners can apply for a Statutory Off Road Notification (SORN), eliminating the need to pay road tax for that vehicle.
Changes in fuel duty were revealed by Rachel Reeves in the Budget announcement. The 5p per liter fuel duty reduction introduced by the government in March 2022 will be extended until the end of August 2026, gradually returning to the March 2022 levels by March 2027. Moreover, a new charge of 3p per mile for electric vehicles (EVs) and 1.5p per mile for plug-in hybrids is set to be implemented from April 2028 onwards. Fuel duty is distinct from car tax and is included in the pump price, with a 20% VAT added on top of the total cost.