The date from which classic cars will be exempt from road tax has changed from 1973 to 1974, until now only cars built before the first of January 1973 were exempt from road tax, after the Government froze the previous 25-year rolling system in 1997. However, from April 2014 any car built before January 1 1974 will be entitled to Historic Vehicle status and free from paying VED (Vehicle Excise Duty). The Finance Bill 2014 states: The Government will extend the cut-off date from which classic vehicles are exempt from VED by one year. From 1 April 2014 a vehicle manufactured before 1 January 1974 will be exempt from paying VED. Although this is good news for some classic car owners, it is believed to be merely a cost saving exercise, as it costs as much to administer VED and SORN (Statutory Off Road Notice) as it raises for the Governmentâ€™s coffers. Hence the reason why SORN will also now be indefinite, rather than have to be applied for annually. It is not known whether this will be a reintroduction of a rolling exemption, but it is thought to be unlikely. Full information on how the change of taxation status isn’t clear yet (even the DVLA’s own website still has the old information). Sadly, if you have a car built between the first of January 1973 and First of January 1974, the process of changing your vehicleâ€™s taxation status is not likely automatic. You will probably need to send the DVLA the relevant documents for amendment to tax class from PLG to Historic Vehicle. You may need to have your vehicleâ€™s build date verified by a recognised body such as British Motor Heritage Foundation, which will show the exact build date. If, on the other hand, your vehicle has a registration date recorded on the vehicle’s Registration V5 or V5C, up to and including the first of January 1974, it should automatically qualify for exemption. You will also need to send the form V10, and update section 7 of your V5C, along with a valid MoT and insurance documents. From April you can send your tax disc in for a part refund using form V14.
Full details, and how to apply for the change in taxation status, is expected to be announced after the 2014 Budget.
Interestingly, Vehicle Excise Duty is often referred to as Road Tax or Road Fund Licence. Revenue from Vehicle Excise Duty hasnâ€™t been used to fund the building of or the maintenance of roads since 1936 and is in face a general taxation. Approximately Â£5.9 billion was raised in 2012 from Vehicle Excise Duty while Â£26.7 billion was raised from fuel duty. Although difficult to quantify it is believed less than Â£8 billion was spent building and maintaining roads. Fuel Duty is also a point of concern. Fuel Duty is at the time of writing 58p per litre and average cost of petrol is Â£1.30. The actual cost of petrol is 50p, so the total cost less Value Added Tax is 108. However we also pay VAT on top of the cost of the fuel AND Fuel Duty of almost 22p, meaning we pay almost 12p VAT on Fuel Duty. Should we be paying a tax on a tax?