News : Classic car rolling tax exemption re-introduced at 40 years

Keith Adams

Princess 1800HL - also offered (to a select few) in diesel form.

Princess 1800HL – from next year, the earliest ones will be ‘tax-free’

From April 2014, the classic car exemption from VED will start rolling from 40 years and that means all cars manufactured in 1973 and into 1974 – previously liable for the annual tax – will now qualify for the exemption from the beginning of next month. From January 2015, that will then run from 1975, and on.

The measure, which was announced by the Chancellor of The Exchequer, George Osbourne, means that cars such as the Ford Escort Mk2 will now be considered ‘tax-free’ from next year. The new cut-off date for classic vehicles will take effect from 1 April 2014, and covers all cars manufactured before 1 January 1974.

In the Overview of Legislation and Tax rates for 2014-2015, it states that the rolling benefit will affect around 10,000 classic car owners per year, who are currently paying VED, but will be newly exempt in 2015. According to the document, which was issued following the Budget, the Government considers the classic car industry to be an important part of the nation’s historical heritage. According to research by the Historic Vehicle Research Institute and the Federation of British Historic Vehicles Clubs, in its publication The British Historic Vehicle Movement: A £4 Billion Hobby, the historic car industry employs about 28,000 people in the UK.

So, from 1 April 2015, vehicles built 40 years ago will be added to the scope of the exemption. The exemption cut-off date in Schedule 2 of the Act will be changed to 1 January 1974 to apply from 1 April 2014 as announced at Budget 2013 and to 1 January 1975 to apply from 1 April 2015 as announced at Budget 2014.

We’ve already given you a run-down of some of the cool classic cars, introduced in 1973, that will be newly VED-free from April 2014 – and, from January next year, with the rolling exemption set at 40 years, more new cars come in, such as the Jaguar XJ-S, Ford Escort Mk2, Princess, and Triumph TR7.

Also in the Budget, it was confirmed that VED – your tax discs – can now be bought and paid for monthly while you will need to cash in your tax when you sell your car, leaving the next owner liable to buy a new tax disc. This logical move has been introduced to reduce tax administration costs.

Posted in: AROnline News
Keith Adams

About the Author:

AROnlineholic between 2001 and 2014 - editor of Classic Car Weekly, and all round car nut...

28 Comments on "News : Classic car rolling tax exemption re-introduced at 40 years"

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  1. David Knowles says:

    As the owner of a 1974 car this can’t come soon enough for me! Back when the 25 year rolling exemption started, I looked forward to Zero rated tax… and then the government of the day decided to freeze it… at 1973! Funnily enough that was when the UK joined the EEC and some of the emissions rules started to apply, theoretically meaning that 1974/75 cars were slightly less polluting than their older brethren. It looks like I’ll still have to wait until January 2015 to benefit, though, as my MGB GT V8 was built in the spring of 1974.

  2. Paul pig says:

    On the Daily Mail website today they run this story.
    They state that Del boys Robin Reliant as seen in Only Fools and Horses will now be a classic car and tax exempt.
    Rant time…. its Reliant Robin not Robin Reliant.
    There was never a Reliant Robin in the program.
    It was a Regal which would now be tax exempt anyway.
    Aaaaaahhhhhhggggghhhhh……

  3. BiTurbo228 says:

    Great news. I wonder how long this will take to filter through to people in the classifieds.

    I’ve got a ’74 Rover P6 I’m looking at that I would love to snag just before it becomes tax-free.

  4. Magnus says:

    We must have set our sights pretty low when we get excited about petty tinkering with an archaic system that should have been scrapped years ago.

    Just get rid of VED altogether. The net cost to the Exchequer (ie total cost minus the huge admin savings) should added to fuel duty.

    Result: zero evasion, both foreign- and UK-registered vehicles pay and it’s fair (the more you drive, the more you pay).

    And yet… no Government has had the ‘cojones’ to do it as, in the short term at least, it will put half of Swansea on Skid Row.

    I despair.

  5. francis brett francis brett says:

    Only another 18 years to wait for my recently purchased Carlton!

  6. F.F.Mitchell says:

    My Midget is 1977, so a three year wait ! However the actual VED is not really all that much, frankly, although not having to pay it compensates a bit for all the additional VAT the Chancellor earns from spares purchases.

  7. Tigger says:

    @4.

    Not as good an idea as it actually sounds and very rarely challenged every time it’s mentioned. There are four reasons against it that I can think of straight away:

    1. Independent petrol stations are already saddled with a huge burden of being unpaid tax collectors for the government, not just in terms of all fuel duties, but VAT too. Please don’t suggest adding to the burden or will simply lose them at an even faster rate.
    2. Car Tax stops a lot of currently untaxed cars from simply being stored on the side of the road.
    3. Fuel duty already disproportionately hits those living in rural areas, where journeys are always longer.
    4. Why should those who have to buy fuel for engines and vehicles that are never used on the road have to pay the entire burden of car tax, even when they will never benefit from access to the road?

  8. Tim Hanson says:

    @7

    1. Independent petrol stations will always be unpaid tax collectors same as pub landlords and most every other business in this country. Only difference is the rates of tax will change.

    2. Countries that don’t operate the VED system still have annual registration rules whereby the owner has to register the car every year. In Spain it costs about £25. The car has still to be insured if it’s kept on the road (even if not used), and they don’t seem to have a problem.

    3. People who live in rural areas choose to live in rural areas, same as those who choose to live in the city and pay ‘congestion’ fees.

    4. Those people who use vehicles off road already have a tax free fuel…. it’s called red diesel.

    Surely a taxation system based upon road usage (mileage) has to be the fairest system of all. My father’s Ford Escort was doing less than a thousand miles a year before he had to give up driving, but he was paying the same VED tax as a sales rep’ doing 20,000 miles a year. How can that be fair?

  9. Tim Hanson says:

    Not sure as to how me cashing in the tax when I sell the car and the new owner having to re tax the car reduces administration costs. Surely it would be less work for that well known ‘job creation’ scheme in Swindon to let the tax run for another 6 months or what ever with the money already in the bottomless pit we call ‘public finances’.

    Personally, I think that this is a covert way of making sure that people who buy second hand cars don’t forget to send off the green slip. Not that I have a problem with that but transparency and honesty is always respected.

  10. David Knowles says:

    @2 are you criticising the Daily Wail’s journalistic standards, accuracy and integrity? Surely some mistake as they are never wrong! ;)

  11. Will M says:

    @4

    They didn’t seem concerned when they put Coleraine on Skid Row and moved the NI car tax jobs to Swansea.

    Don’t forget, to the rich we’re nothing but peasants, worker ants that they can crush under their boots without thinking. We’re all slaves to their economic system.

  12. Kev Sharp says:

    @9
    Sounds like win win for the government. You sell a car on the 10th of the month. You have lost 20/21 days of tax. The new owner then has to tax the car for one month even though they have lost 10 days worth. Talk about the government having their cake and eating it. I can’t for the life of me see how surrendering valid car tax upon sale of a car helps reduce admin costs as now every time a car changes hands a new admin process regarding car taxation has now been created. Having worked in Government since I was 18 I know all too well about job creation for “10 percenters” as we call them.That is those individuals that have a job description and won’t go beyond it e.g a job description requiring them to write a 50 word paragraph means exactly that, not 50 words and a full stop at the end.

  13. Paul pig says:

    @10. I wouldn’t dare criticise their journalism. It was a great article mentioning the Robin Reliant. I am sure they are very knowledgeable about all things cars. They only have to visit this site to read about cars such as the Minor Morris, Dolomite Triumph, Avenger Hillman etc.

  14. Will M says:

    @13

    The MINI BMW?

    :)

  15. Tigger says:

    @8:

    1. Petrol retailers collect more tax than any other kind of business and the burden of this kind of activity can be crippling, with no remuneration at all. Yes, pubs are crippled by the same kind of unpaid tax collection and they are closing at a similar rate to petrol stations, so that example doesn’t really help your case I’m afraid.

    2. So, under the system of annual registration, they still have to dispaly some kind of certificate and the government collects money to fund it. Please would you explain the advantages of this system over similar levels of administration for car tax discs?

    3. May I assume that you’re a city dwleer judging by that comment?

    4. Red diesel is of little help to those that need to use petrol powered engines off road and there are very few people that can legitimately use red diesel (again, suspect that you’re a town dweller…)

    5. The tax disc is a tax on car ownership only (it has nothing to do with road maintenace and hasn’t done since around the 1930′s) and has nothing to do with the use of the vehicle. Petrol tax is to do with the use of the vehicle, so both your dad and his Escort, along with the “sales rep” both get landed with car tax, it’s just that the rep gets hammered for fuel tax too. So, they both pay a relatively small amount to keep their car on the road, while they then both pay an amount which is in direct proportion to use. As tax systems go, this is as fair as it gets.

  16. As I read the new rolling tax exemption my Princess (a Wolseley 18-22 series actually) is the only one that’s likely to benefit from April 2015 as it was manufactured in June 1974 as a pre-production car. Although the pilot build for the 18-22 will be before 1st Jan 1975 I am not aware of any of those surviving. However when it rolls on to April 2016 a few will then benefit.

  17. Tony Evans says:

    Great! always fancied a Princess. Now all I have to do is find one in good nick….

    Actually, I’d prefer a Dolomite 1850HL ;)

  18. Tim Hanson says:

    @15
    1/ Strangely enough the main cause of the demise of pubs and independent petrol retailers IS common to both of them, and that is the rise of the supermarkets. Cheap booze and petrol have been used as loss leaders by supermarkets for some time now just to get the punters in. In the hey day of pubs and independent petrol retailers they were returning a lot more tax to the treasurer than they are now, but it didn’t prevent them from making a profitable living.

    2/ I already have….. you pay your £25 and your car is registered. If you want to put it on a road you can but it has to be insured even if you don’t want to use it. If you want to use it then it has to pass a certified inspection (MOT) too. Everyone pays a fair price to make their car legal and after that it’s down to mileage/usage as to the amount of tax you pay.

    3/ Strangely enough I don’t live in a city or a town but you can’t use the argument that because I live in a particular place I am disadvantaged. We all choose where we want to live, and if where you’re living gives you a problem, then move to somewhere that doesn’t. Saying…. I would like to live in Knightsbridge, even though I can’t afford it, doesn’t give me the right to live in Knightsbridge.

    4/ Red Diesel is currently around 67p a litre at the moment but I filled my road car with LPG for 64p a litre from the local gas station. Don’t ask me why LPG is cheaper than a supposedly tax free fuel, but it is. So….. what’s the problem? If you can’t use a diesel engine convert your petrol engine to burn gas.

    Not getting into a barney on here Tigger…. and you are entitled to your view. Folks on here are smart enough to come to their own decisions.

  19. David Knowles says:

    @16 If I won the lottery, one of the cars I’d want in my multi-car garage would be a Wolseley Saloon, probably in Reynard Metallic with Sorrel trim…

  20. Pedro the parrot says:

    On the whole this is good news; my ’73 Volvo will cost me £240 less a year. Wandering around car shows there always seemed to be a glut of pre ’73 classics and very few after that date so hopefully some of the later cars will appear more often.
    The 1960 exemption from MoT testing was a very bad idea however and I do hope it isn’t extended. Getting a second opinion, a good look underneath your car and a performance test of braking for less than £50 is no hardship. If older cars are separated off from current ones, especially in a test which largely encourages safety then it could be that their use is restricted.

  21. DeLorean's Accountant says:

    @18 – Tim Hanson

    “We all choose where we want to live”
    Not true. Not all of us have careers that allow us to work where ever we choose.

    “If you can’t use a diesel engine convert your petrol engine to burn gas”
    The conversion is around £1500, which means a payback period for many of around 3 years, possibly more. Only at that point are you at the same cost as you would’ve been if you hadn’t have fitted it.

  22. Tim Hanson says:

    @21

    Ok…. I take your point, there will always be exceptions but I think it’s true to say that the vast majority of folks that work in the countryside prefer to live in the countryside, whilst those who choose to work in the towns and cities commute. I’ve never personally known or heard of anyone who lives in a city commuting to the countryside every day.

    Depends on the engine as to the cost. I converted my ’85 Audi GT coupe to LPG earlier this year for about £120 + inspection fees using second hand equipment taken from a later model Audi coupe that was being broken for spares on ebay. Is not difficult to do, but it is fairly labour intensive. Took me a couple of days to fit but you don’t have to spend a lot of money.

  23. Nige says:

    Great news as at long last my 73 Midget will get some use outside the normal spring/summer months I normally pay to tax it under.
    In all likelihood,however, we can kiss this perk goodbye if Ed Balls becomes chancellor, (don’t laugh) next year. Fortunately, it will be too late for him to roll back the 1973 tax year.

  24. Nige says:

    @19
    They are beautiful cars and I’ve always fancied one but there can’t be more than a handful left. Whenever I’ve seen them in the metal, (scrapyards in the 1980s and one for sale at my local garage for £500 in 1989-with wheel arches made of filler, another on a farm in Bouth in the Lakes) they always had red paintwork.
    I do have an original brand new, full width Wolseley boot badge still in its BL wrapping. I think that’s going to be the closest I ever come to owning one of these cars now.

  25. Ross A says:

    Scrap VED and increase fuel to the equivalent standard annual amount (however that’s calculated). The ultimate pay as you drive, without complex tracking systems.

    The best thing is that the more fuel you use per mile (usually big 4×4′s or luxury sports cars) the more you pay. The small more economical ones use less and pay less.

    It’s not rocket science and it’s cheap and easy to implement. No need for administration etc.

  26. francis brett francis brett says:

    Why would the government cut off a revenue stream? They know full well scrapping VED and adding a penny on fuel would more than cover it.

  27. thegravestoneman Gaz says:

    Delboy never drove a Reliant Regal to my knowledge, the Regal was the saloon option the commercial variant was a Supervan III. I spent some of my formative years ‘Grandad’ style in the back of one of these.

  28. woofwoof says:

    I have to agree that VED still makes no sense to me. If it’s a tax on car ownership, why does that depend on when it was registered and how large the engine (or bad the emissions) are?
    Petrol consumption is a pollutant, and therefore even ride-on mowers should pay more through higher tax on fuel just like the 20,000 miler in a new hybrid, or the 20,000 miler in his Evoque or XK.

    The answer, perhaps, is that when you can point at a figure that states (for a £1.34 litre pump price) – 58p is duty, 22.4p is VAT. That’s 60% of the cost goes to the state coffers. Any increase may be viewed as “another tax” no matter how fair it is that the more you use, the more you pay.

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