Drivers may qualify for car tax exemptions under certain conditions. Vehicle Excise Duty, commonly known as car tax, is typically an annual obligation, although payment installment options exist. The current standard rate for cars registered after April 2017, excluding first-year rates for new vehicles, stands at £195 per year.
For vehicles registered between March 1, 2001, and March 31, 2017, varying car tax rates apply. Rates range from £20 annually for vehicles emitting up to 100g/km of CO2 to £760 per year for those emitting over 255g/km of CO2.
Individuals receiving certain disability benefits, such as PIP, may qualify for up to 100% car tax exemption, especially if they receive higher benefit rates. Those on standard benefit rates receive a 50% discount. Only one vehicle can be tax-exempt at a time.
Organizations using vehicles to transport disabled individuals, except ambulances, are also exempt from car tax. Vehicles made before January 1, 1985, do not require car tax payments. Mobility vehicles and powered wheelchairs meeting specific speed criteria are also exempt.
If a vehicle is currently unused and off public roads, applying for a Statutory Off Road Notification (SORN) exempts it from road tax. Additionally, fuel duty differs from car tax and is included in pump prices, with an additional 20% VAT charge.
Recent announcements by Rachel Reeves in the Budget reveal a temporary extension of the 5p per litre fuel duty cut until August 2026, gradually returning to pre-cut levels by March 2027. Furthermore, a new per-mile charge for electric vehicles and plug-in hybrids is set to be introduced in the future.
