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 with options available to spread out payments. The standard rate for cars registered after April 2017, excluding the initial year’s rate for new vehicles, currently stands at £195 per year.
Different car tax rates apply to cars 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.
Drivers receiving certain disability benefits, such as PIP, may be eligible for up to 100% car tax exemption, with full exemption for those on higher benefit rates and a 50% discount for standard rate recipients. Only one vehicle per person can be exempt at a time.
Additionally, vehicles used by organizations to transport disabled individuals (excluding ambulances), vehicles manufactured before January 1, 1985, mobility vehicles, and powered wheelchairs meeting specific speed criteria are also exempt from car tax. If a vehicle is declared off-road with a Statutory Off Road Notification (SORN), road tax payment is not required.
Recent announcements by Rachel Reeves in the Budget revealed the extension of the 5p per litre fuel duty cut until August 2026, with rates gradually reverting to pre-2022 levels by March 2027. New charges of 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids are set to be implemented from April 2028.
Fuel duty, a separate charge from car tax, is included in pump prices with an additional 20% VAT on the total amount.