Drivers may qualify for exemptions from paying car tax under certain conditions. Car tax, officially known as Vehicle Excise Duty, is typically an annual obligation, but payment arrangements can be spread out. The standard rate, applicable to cars registered post-April 2017 (excluding first-year rates 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 annually for vehicles emitting up to 100g/km of CO2 to £760 yearly for those emitting over 255g/km of CO2.
If receiving certain disability benefits like PIP, drivers can receive up to 100% car tax exemption, with full exemption for higher-rate benefit recipients and a 50% discount for standard-rate beneficiaries. Only one vehicle can be exempt at a time.
Vehicles used by organizations to transport disabled individuals, excluding ambulances, are also exempt. Cars made before January 1, 1985, do not require car tax. Mobility vehicles and powered wheelchairs with specific speed limitations are also exempt.
For vehicles not in use and kept off public roads, a Statutory Off Road Notification (SORN) can be applied to avoid road tax payments.
In budget announcements, a 5p per litre fuel duty cut introduced in March 2022 will extend until August 2026, gradually reverting to pre-2022 levels by March 2027. Additionally, a new per-mile charge for electric and plug-in hybrid vehicles is set to be enforced from April 2028.
Fuel duty, a separate cost from car tax, is embedded in pump prices, with an additional 20% VAT charged on the total.
