Drivers may qualify for an exemption from paying car tax under specific circumstances. Car tax, officially known as Vehicle Excise Duty, is typically payable annually, with options available to spread out payments. For cars registered after April 2017, excluding first-year rates for new vehicles, the standard charge is £195 per year.
Different car tax rates apply to vehicles registered between March 1, 2001, and March 31, 2017. Rates range from £20 per year for cars emitting up to 100g/km of CO2 to £760 per year for those emitting over 255g/km of CO2.
Certain disability benefits, such as PIP, can lead to up to a 100% exemption from car tax. Higher benefit payment rates generally result in total exemption, while standard rates qualify for a 50% discount. Only one vehicle can be exempt from tax at a time.
Vehicles used by organizations to transport disabled individuals, excluding ambulances, are also exempt from car tax. Cars made before January 1, 1985, do not require car tax payments.
Mobility vehicles and powered wheelchairs are exempt if they have a maximum road speed of 8mph and are limited to 4mph on footways. If a vehicle is not in use and kept off public roads, a Statutory Off Road Notification (SORN) can be applied for to avoid road tax payments.
In recent news, Rachel Reeves disclosed in the Budget that the 5p per litre fuel duty cut introduced by the Conservative government in March 2022 would be extended until August 2026, after which rates will gradually return to pre-2022 levels by March 2027. Furthermore, a new charge of 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids is set to be implemented.
Fuel duty is distinct from car tax and is included in fuel prices paid at the pump, with an additional 20% VAT charged on the total price.