Certain circumstances can lead to drivers being exempt from paying car tax, officially known as Vehicle Excise Duty, which is typically an annual payment. The standard rate for cars registered post-April 2017, excluding the first-year rate for new vehicles, stands at £195 per year.
For vehicles registered between March 1, 2001, and March 31, 2017, different tax rates apply. The rates vary from £20 annually for vehicles emitting up to 100g/km of CO2 to £760 yearly for those emitting over 255g/km of CO2.
If you receive certain disability benefits such as PIP, you can be exempt from car tax by up to 100%. Those on higher benefit rates usually get a full exemption, while standard rate recipients receive a 50% discount, limited to one vehicle exemption at a time.
Vehicles used by organizations to transport disabled individuals, excluding ambulances, are also exempt. Pre-1985 vehicles, mobility vehicles, and powered wheelchairs meeting specific speed criteria are exempt. Keeping a vehicle off public roads with a Statutory Off Road Notification (SORN) also exempts it from road tax.
In recent news, Rachel Reeves announced in the Budget that the 5p per liter fuel duty cut introduced in March 2022 will only extend until August 2026, gradually returning to pre-2022 levels by March 2027. A new per-mile charge for electric and plug-in hybrid vehicles will be introduced in 2028, separate from car tax, which is paid at the pumps with an additional 20% VAT charge.