Drivers may qualify for car tax exemption under specific circumstances. Car tax, officially known as Vehicle Excise Duty, is typically due annually but can be paid in installments. The standard rate for cars registered after April 2017 is £195 per year, excluding the first-year rate for new vehicles.
Different car tax rates apply to vehicles registered between March 1, 2001, and March 31, 2017. Rates range from £20 per year 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, like PIP, may be eligible for up to 100% car tax exemption, particularly if they receive higher benefit rates. Standard rate recipients can receive a 50% discount on car tax for one vehicle at a time.
Additionally, vehicles used by organizations to transport disabled individuals, vehicles built before January 1, 1985, mobility vehicles, and powered wheelchairs meeting specific criteria are also exempt from car tax. Drivers can also apply for a Statutory Off Road Notification (SORN) if their vehicle is not in use and kept off public roads, relieving them of the need to pay road tax.
Recent announcements by Rachel Reeves in the Budget indicate that the 5p per litre fuel duty cut introduced by the Conservative government in March 2022 will be extended until the end of August 2026. Afterward, fuel duty rates will gradually return to March 2022 levels by March 2027. Moreover, 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.
Fuel duty is separate from car tax and is included in the fuel price at the pumps, with an additional 20% VAT charged on the total price.