Drivers have opportunities to avoid car tax payments in specific situations. Car tax, officially known as Vehicle Excise Duty, is typically an annual obligation, but payment plans can be arranged. For cars registered after April 2017, the standard rate, excluding the initial year’s rate for new vehicles, stands at £195 annually.
Different tax rates apply to vehicles registered between March 1, 2001, and March 31, 2017. The 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.
People receiving certain disability benefits, such as PIP, can be eligible for up to 100% car tax exemption, especially if they receive the higher benefit rates. Standard rate recipients can get a 50% discount, but the exemption applies to only one vehicle at a time.
Vehicles used by organizations to transport disabled individuals are also exempt from car tax, excluding ambulances. Cars manufactured before January 1, 1985, do not require car tax payments. Mobility vehicles and powered wheelchairs are exempt if they have a maximum speed of 8mph on roads and are limited to 4mph on footways.
When a vehicle is not in use and kept off public roads, drivers can apply for a Statutory Off Road Notification (SORN) to waive road tax obligations for that vehicle. The Conservative government’s 5p per litre fuel duty reduction, extended until August 2026, will gradually return 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 will be implemented from April 2028.
Fuel duty and car tax are distinct, with fuel duty included in pump prices and subject to a 20% VAT charge.