The Government has issued a statement about changes to tax on cars
The Government has released a statement regarding the impact of tax changes for certain vehicles. Liberal Democrat MP Ben Maguire posed a written question, querying whether the Government had considered the effects of changes to vehicle excise duty, commonly known as car tax.
He was particularly interested in whether ministers had looked at the impact of scrapping the car tax exemption for “classic cars”, which includes classic and heritage vehicles. Vehicles that were built or registered over 40 years ago are normally exempt from car tax.
However, as of April 2025, changes mean that vehicles registered between 1985 and 2001 are now subject to car tax.
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Treasury minister Dan Tomlinson responded on behalf of the Government. He said: “The Government annually reviews the rates and thresholds of taxes and reliefs to ensure that they are appropriate and reflect the current state of the economy.
“The Chancellor makes decisions on tax policy at fiscal events in the context of the public finances.” The DVLA recently issued a reminder to drivers that they must register their vehicle for car tax.
The agency posted on social media: “You must tax your vehicle, even if you don’t have to pay anything. Tax it online athttp://gov.uk/dvla/tax.”
Car tax can be paid as a lump sum for the year or in monthly instalments. Failure to pay your car tax could result in a fine.
If your car isn’t taxed and is found parked on a public road, it could be clamped or impounded.
Chancellor Rachel Reeves will unveil a policy to introduce a 3p per mile tax for EVs when she delivers her November 26 Budget, according to reports. Motoring groups expressed concern that such a tax could put some people off from switching to electric motoring.
The Treasury faces a reduction in revenue from fuel duty as more drivers move from petrol or diesel cars to EVs.
Fuel duty raised just under £25 billion in the 2024/25 financial year. A Government spokesperson said: “Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles.
“We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we have invested £4 billion in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.
“Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.”
AA president Edmund King acknowledged that the Treasury faces losing fuel duty revenue, but urged the Government to “tread carefully” to avoid slowing the transition to EVs.
He said: “We need to see the detail of this proposal to ascertain whether these new taxes will be equitable or a poll tax on wheels.”
