LAW ➤ New VED exemption for pre-74 reg cars

16 Apr
By Wayne Gorrett – first published for Kwik Fit Insurance - VED exempt i

In his 2013 Budget, the Chancellor of the Exchequer proffered a significant concession for classic car owners and club operators – with effect from April 1st (annual rolling), 100 per cent VED exemption would be introduced for cars made prior to 1st January, 1974.

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That means all cars manufactured in 1973 – previously liable for the annual tax – will now qualify for the exemption. Also, Statutory Off-Road Notifications (SORNs) will no longer be annual, but indefinite.

“The measure will have effect for eligible vehicles presented for exemption from 1 April 2014 and each subsequent 1 April thereafter” –

Previously, stone-clad legislation ruled that only cars made in 1972 or earlier qualified for free tax (currently charged at £225 a year if your engine is bigger than 1,549cc). Now, any vehicle manufactured on or before 31st December, 1973 won’t attract VED, including all sorts of classics made in 1973, ranging from MGB GT V8 to the ubiquitous Austin Allegro.

This raises several issues and motoring forums are awash with opinions and arguments from both sides of the fence. - VED exempt a

From this month, it is estimated that some 314,000 vehicles are now exempt from vehicle excise duty. Assuming most have an engine capacity of less than 1549cc, that’s £32 million per annum of money lost to the public purse – a significant sum by anyone’s reckoning.

Will the new regulations fuel any noticeable ‘rush’ to buy pre-’74 cars? No – the money saved from not paying VED, currently around £225 for engine capacities under 1,599cc, will most likely be quickly eroded by on-going maintenance costs.

“The maintenance costs will mainly be driven by the popularity of the car – and with it spares availability – the individual maintenance record of the car and the quality of the brand,” said Graham Eason, managing director of Great Escape Classic Car Hire, which currently operates a 60-strong fleet of classic cars. “With most post-1960 cars the age of the car is not an issue with spares and maintenance costs,” he added. - VED exempt h

Classic car owner David Banes, said “Classic car ownership is rarely about the peripheral expenses when the vehicle itself is the main cost and any exemptions may be regarded as largely irrelevant. You could say that if we’re putting the time, effort and expense into keeping our collective motoring heritage alive then a little help from the government is welcome.”

However, opponents of the new regulations argue that the £32m hole in the public coffers created by ‘historic car’ VED exemption has to be filled from somewhere. That ‘somewhere’ comprises a significant majority of VED-paying, non-classic car owners subsidising the small minority. - VED exempt b

An increasingly worrying issue is the inability of modern car mechanics to repair cars from 40 years ago. The valuable skills required to maintain cars of that era are neutered by today’s ‘plug-and-play’ cars. The availability of mechanics to repair older cars is currently not a problem as many specialist workshops exist. However, without investment in these skills, it could quickly become a serious issue as most specialist garages are owner-operated, one man bands whose skills will die with them.

Taking the lead in an effort to pre-empt this issue, Great Escape employs apprentices to be trained in the specialist skills required to keep old cars running safely.

“A lot of young school leavers are more interested in this type of specialist work than modern cars because it requires a skill. So hopefully, with the right encouragement, the skills can be nurtured in a new generation,” said Graham Eason. - VED exempt f

Some classic cars ideally require specific fuel such as leaded petrol. This is a minor issue for owners as additives are available. Besides, for a number of years it has been possible to convert most classic cars to run on unleaded and many have done so to overcome the problem.

Several opponents of the new legislation expressed criticism of the negative environmental impact these cars attract. Obviously, these cars are not as fuel efficient as their latter-day counterparts and are not required to pass the stringent emissions tests imposed on modern cars. However, they do run on modern oils and fuels which are considerably cleaner than those available 40 years ago. - VED exempt c - Copy

Debate about the environmental impact of older cars should really take into account how often these cars are actually driven. In comparison to the national fleet, very few of these cars are driven daily and most are on limited mileage insurance policies covering less than two thousand miles a year.

“Our hire fleet does tend to do higher mileages than normal classics, but even they are less than modern cars’ average annual mileages. There is the constant threat of legislation over classic cars but personally I feel it is a bit of a red herring – they are relatively few in number, cover low mileages and are well maintained. Perhaps reducing the use of modern cars would be a quicker and more productive way to reduce overall car emissions. Classic car owners have a responsibility to maintain their cars and improve them to reduce environmental emissions, but they should not necessarily be singled out,” said Eason. - VED exempt g

Surprisingly, one area of classic car ownership cost that has remained reasonably stable is that of insurance. Values of cars over 40 years old invariably increase, depending on their condition. Research suggests that the majority of classic car insurance is brokered by independent specialists rather than major brands in the car insurance business.

Small, specialist brokers are well placed to better understand the very specific requirements of classic car insurance. Vehicle storage, annual mileage limitations, agreed valuations, named driver restrictions are only a few of the many issues encountered when procuring classic car insurance.


Said Graham Eason of future trends in classic ownership… “If I anticipate any trend it would be with the pre-1960 cars that no longer need an MOT. Personally, I think this is a very unwise decision by the Government. In terms of insurance, without a MOT, I don’t know how an owner would be able to prove the car’s road worthiness in the event of an accident.”

There is currently a growing argument for a fixed token VED payment of around £60. This may appease opponents of zero-VED and find middle ground in the debate. That may be a reasonable solution.

But when all is said and done, there are relatively few E-Types and Ferrari’s out there – the more common classic cars are Austin’s, Morris’s and Triumphs. They are part of the industrial heritage of a once very great Britain. Evidence suggests that these cars do less than a thousand miles a year on average and support a surprisingly large number of specialists and restoration firms. - VED exempt e

When I see a classic car pootling along, I don’t think of the driver as being a tax-dodger and I very much doubt you do either. We see a passionate classic owner, nostalgic for a bygone era of motoring. He will undoubtedly have deep pockets to be able to continue driving his classic car because be assured, most owners will need them.

In case you were wondering – no, I am not a classic car owner. But that doesn’t mean I wouldn’t want to be one day. I’m a poverty-dodging motoring and lifestyle writer so, barring two or three hideous examples, I have an admiration and appreciation for most things automotive.

The UK is blessed with all its main museums being free – concurrently, I don’t think we should take umbrage when asked to preserve what remains of our automotive heritage.


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Posted by on April 16, 2014 in And finally...


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