Classic Car Owners Braced for Potential VED Exemption Removal
Classic car enthusiasts are bracing for potential changes to Vehicle Excise Duty (VED) exemptions. Shadow transport secretary Richard Holden has expressed concern about reports that Rachel Reeves, the Shadow Chancellor, is considering closing a loophole that exempts classic cars from road tax. The move could impact around 340,000 owners and raise approximately £107 million annually for the Treasury.
The exemption for classic cars over 40 years old was introduced in 2015. If removed, owners of classic cars registered between 1 April 1985 and 1 March 2001 would face annual VED rates of £220 or £360, depending on engine size. This includes popular models like Minis and MGBs produced before 1985. Mark Roper of Hagerty UK warns that this would be 'a blow' to classic car owners and the industry, which contributes nearly £3 billion in UK taxes.
Labour has a history of scrapping such exemptions. In 1997, under Gordon Brown, road tax exemptions for classic cars were previously removed. Holden has made protecting the classic car sector his 'number one priority'. The potential increase in VED earnings from removing the exemption is estimated to be around £107 million. However, the government has not confirmed whether the exemption will be removed, with a Treasury spokesperson stating that tax policy decisions are made at fiscal events. The next budget, where this could be announced, is scheduled for October 22, 2025.
With the potential removal of the classic car VED exemption looming, owners and enthusiasts await the government's decision. The impact on the classic car industry and owners is significant, with potential changes set to be revealed in the 2025 budget.
