Drivers may qualify for an exemption from paying car tax under specific conditions. Officially known as Vehicle Excise Duty, car tax is typically an annual obligation, although payment options can be spread out.
For cars registered after April 2017, excluding first-year rates for new vehicles, the standard car tax rate is currently £195 per year. Different rates apply to cars registered between March 1, 2001, and March 31, 2017, with the lowest rate set at £20 per year for vehicles emitting up to 100g/km of CO2, increasing to £760 per year for those emitting over 255g/km of CO2.
Certain disability benefits, such as PIP, can grant drivers up to 100% car tax exemption, especially if they receive higher benefit rates. Standard rate recipients may receive a 50% discount, with the exemption limited to one vehicle at a time.
Vehicles used by organizations to transport disabled individuals are also exempt from car tax, excluding ambulances. Additionally, vehicles manufactured before January 1, 1985, do not require car tax payment.
Mobility vehicles and powered wheelchairs with a maximum road speed of 8mph and a 4mph footway limit, as well as vehicles declared as Statutory Off Road Notification (SORN), are also exempt from car tax.
Following Rachel Reeves’ Budget announcement, the 5p per litre fuel duty reduction initiated by the Conservative government in March 2022 will only be extended until the end of August 2026. Subsequently, rates will gradually revert to March 2022 levels by March 2027, with new per-mile charges for electric vehicles and plug-in hybrids set to be introduced from April 2028.
Fuel duty, distinct from car tax, is integrated into the pump price, with an additional 20% VAT applied.