Thousands of drivers with cars bearing specific registration plates have been issued with an urgent warning. The stark alert has been sent to motorists with cars made between 2001 and 2017.
A car tax warning has been sent out to drivers and road users after a Vehicle Excise Duty (VED) shake-up under the Labour Party. For older cars, including modern classics registered between 1 March 2001 and 31 March 2017 the system is still based on emissions, and those emitting less than 100g/km will still pay nothing, while for everybody else there’s a £10 increase compared to 2024 rates. Car insurance firm Hagerty said: “That means owners of older cars emitting more than 255g/km of CO2 will pay £735 a year for the privilege of driving on Britain’s beautifully-maintained road network. Ahem.”
The firm added: “Cars registered before 1 March 2001, that were still younger than 40 years old on 1 January 2025, are charged based on engine capacity. That’s £210 a year for those under 1,549cc and £345 for anything above.”
It explained: “The Government considers any car older than those to be a “historic vehicle” and is therefore exempt from paying road tax, or, indeed, being required to have an annual MOT test.”
Drivers who have vehicles registered afterwards pay under a different system. For the first year of registration, they have to pay a “showroom tax”, which is based on the vehicle’s CO₂ emissions.
John Cassidy, managing director of sales at Close Brothers Motor Finance, says some buyers are already put off by a limited battery charging infrastructure for EVs.
Lorna Macpherson, a motor finance expert at Ocean Finance, which offers car loans, suggests that while the changes to the tax regime do make cleaner cars cheaper to run, drivers may be unable to switch due to the escalating cost of motoring.
She says: “For petrol and diesel cars, an increase in VED means higher running costs for owners, making newer, more efficient cars even more attractive.”
However Lorna notes that “with rising interest rates on car finance” and Brits across the country feeling the pinch, “many will hold on to their current vehicles for longer rather than upgrading”.