Drivers may qualify for car tax exemption under certain conditions. Car tax, officially known as Vehicle Excise Duty, is typically an annual obligation, although payment options can be spread out. The standard rate for cars registered after April 2017, minus the first-year rate for new vehicles, currently 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 vehicles emitting up to 100g/km of CO2 to £760 per year for those emitting over 255g/km of CO2.
If you receive disability benefits such as PIP, you may be eligible for up to 100% car tax exemption, especially if you are receiving higher benefit rates. Standard rate recipients are entitled to 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. Additionally, vehicles manufactured before January 1, 1985, do not require car tax payment.
Mobility vehicles and powered wheelchairs are exempt if they have a maximum road speed of 8mph and are equipped with a device limiting them to 4mph on footways.
Drivers can 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 for that vehicle.
Recent announcements by Rachel Reeves in the Budget included the extension of the 5p per litre fuel duty cut until the end of August 2026, after which rates will gradually revert to March 2022 levels by March 2027. Additionally, a new charge of 3p per mile for electric vehicles (EVs) and 1.5p per mile for plug-in hybrids is slated for introduction in April 2028.
Fuel duty, distinct from car tax, is incorporated into the price paid by drivers at the pumps, with an additional 20% VAT applied to the total cost.