21 Mar 2014

2014 Budget: Not so Taxing for Classics

Mike Armstrong looks at how the recent UK budget has benefited classic car owners

The 2014 budget has brought great news for many classic car owners across the length and breadth Britain. Anyone in possession of a vehicle over 40 years of age will now become tax exempt under new legislation plans. Furthermore, the date from which the 40 year limit spans will now be rolling, as opposed to the current fixed system.

Chancellor of the Exchequer, George Osbourne, officially unveiled plans for a radical overhaul in the current classic car tax system in the Parliamentary budget. The new plans will supersede the current system, with an entrenched date, to provide tax breaks for up to 10,000 classic car owners across Britain.

Hobbyists can apply for exemption provided their vehicle was manufactured before 1st January 1974, plus one year from this point forwards, effectively meaning anything from 1973 and beyond will now be exempt from VED. New rules will come into effect on 1st April 2014 and will be welcomed with opened arms by many classic car enthusiasts.

Some will argue however that these new exemption rules are contradictory. Vehicles registered from 2001 onwards are taxed proportionately based on their emissions. Therefore the assumption in place is that motorists should pay X-amount based upon the pollution they create. Furthermore, Vehicle Excise Duty is a major contributor towards reparation works carried out on the nation’s highways.

Whilst these remain valid points - to some extent - one factor has to be considered. The vast majority of owners of vehicles pre-dating 1974 will not use their classics as daily commuter vehicles. More often than not, classic car owners often own a modern equivalent to bear the brunt of daily motoring. Admittedly, classic cars produce more harmful chemicals due to archaic technology and a lack of refinement, however with owners representing such a small minority, little realistic effect would take place. So with minimal miles covered, and therefore minimal pollution, the budget plans seem extremely realistic.

Good budget?

Indeed, the current budget plans seem fairly relieving for motorists, potentially for the first time in recent history. Accompanying the new classic car tax legislation, a frozen rate of fuel duty was officially confirmed. Originally billed to remain frozen throughout the current Government, the frozen rate of fuel duty will keep the prices at the pump stable, helping businesses and families to recover from previous recession wounds.

Those who do not own a classic though can now purchase their car tax on a monthly basis, with payments via direct debit. Also, owners will need to refund their current tax disc when selling the vehicle, leaving the new owner liable to purchasing the tax themselves. Such plans have come into force as a method of improving efficiency and removing red tape from the DVLA, hence also cutting costs.

In a move which appears to appease classic car owners, many classic cars will now be exempt from the aforementioned monthly tax system. Do not confuse this with MOT regulation though, which will not be based upon a rolling date basis. With this in mind though, this is certainly a move which this writer approves of greatly.