Drivers may qualify for an exemption from car tax under certain conditions. Officially known as Vehicle Excise Duty, car tax is typically an annual obligation, although there are options available to spread out payments.
For cars registered post-April 2017, excluding the initial year’s rate for new vehicles, the standard charge is currently £195 per year. Different tax rates apply to cars registered between March 1, 2001, and March 31, 2017, ranging from £20 annually for vehicles emitting up to 100g/km of CO2 to £760 per year for those emitting over 255g/km of CO2.
Under specific circumstances, drivers can be exempt from car tax. Individuals claiming certain disability benefits, such as PIP, may receive up to a 100% exemption, primarily if they receive the higher benefit rates. Standard rate benefit recipients are eligible for a 50% discount. Exemption is limited to one vehicle at a time.
In addition, vehicles used by organizations to provide transport for disabled individuals, excluding ambulances, are also exempt from car tax. Vehicles manufactured before January 1, 1985, do not require car tax payment. Mobility vehicles and powered wheelchairs with a maximum speed of 8mph on roads, limited to 4mph on footways, are also exempt.
Furthermore, if a vehicle is not in use and is kept off public roads, drivers can apply for a Statutory Off Road Notification (SORN), eliminating the need for road tax payment.
Recent announcements by Rachel Reeves in the Budget revealed the extension of the 5p per litre fuel duty cut until the end of August 2026, after which rates will gradually return to pre-2022 levels by March 2027. Additionally, a new charge of 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids is set to be implemented from April 2028.
It is essential to note that fuel duty is distinct from car tax, included in the pump price with an additional 20% VAT charge.