Drivers may qualify for car tax exemption under certain circumstances. Car tax, officially known as Vehicle Excise Duty, is typically payable annually, though payment options may vary. The standard rate for cars registered after April 2017, excluding first-year rates for new vehicles, stands at £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.
Individuals receiving certain disability benefits, such as PIP, may qualify for up to 100% car tax exemption, particularly at higher benefit payment rates. Those on standard rates can receive a 50% discount, with exemption limited to one vehicle at a time.
Vehicles used by organizations to transport disabled individuals, excluding ambulances, are also exempt from car tax. Vehicles manufactured before January 1, 1985, are also exempt from car tax.
Mobility vehicles and powered wheelchairs meeting specific speed and road regulation criteria are exempt. Drivers can apply for Statutory Off Road Notification (SORN) if their vehicle is not in use and kept off public roads, eliminating the need for road tax payment.
Recent announcements by Rachel Reeves in the Budget revealed an extension of the 5p per litre fuel duty cut until August 2026, with rates gradually returning to pre-2022 levels by March 2027. Additionally, a new charge structure for electric and plug-in hybrid vehicles is set to be implemented from April 2028.
Fuel duty, separate from car tax, is incorporated into pump prices with an additional 20% VAT charge.