Five tips to save on annual car tax Vehicle Excise Duty payments this summer

Drivers can save on their annual Vehicle Excise Duty (VED) car tax payments for five reasons, according to experts.

First Response Finance has listed simple reasons motorists can get out of paying the annual £180 charge.

These include simple fixes like applying for exemptions and reductions to more expensive solutions such as switching to a brand new vehicle.

Jonathan Such, head of sales at First Response Finance, explained: “We know how expensive it is to be a driver in the UK right now.

“There are so many costs to consider, both before and after you get your vehicle.”

Company car

Benefit-in-kind payments are usually taken out of salaries before receiving their pay packets meaning motorists do not have to sort out their own tax fees.

According to GOV.UK, motorists only pay tax on the value to you of the company car which depends on things such as how much it would cost to buy. Meanwhile, the value of the car is reduced if it has low CO2 emissions or is only driven part-time.

Classic cars

Vehicles built over 40 years ago are totally exempt from paying VED rates on a rolling cycle. This means cars built before January 1, 1983, were no longer liable for the charges as of April 1, 2023.

Drivers still need to contact the DVLA and tax their car but will not have to pay the hefty fee. However, cars which are used as a hire vehicle or commercially as part of a trade or business will not escape the fees.

Electric vehicle

As things stand, fully-electric cars do not pay any car tax including in many of the UK’s Clean Air Zones. However, this is soon set to change with Chancellor Jeremy Hunt confirming in his Autumn Budget that electric car owners would soon have to splash the cash.

But the Government has given owners a two-year warning with EV owners not paying charges until 2025.

RAC head of roads policy Nicholas Lyes said: “While vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, we believe a first-year zero-VED rate benefit should have been retained as a partial incentive.

“But we don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one.”

Tax exemptions and reductions

According to GOV.UK, drivers will not need to pay road tax if they receive a range of disability benefits. These include the higher rate mobility component of Disability Living Allowance (DLA) enhanced rate mobility component of Personal Independence Payment (PIP) or the higher rate mobility component of Child Disability Payment.

Meanwhile, road users can get a 50 percent reduction if they have either the PIP standard rate mobility component or ADP standard rate mobility component.

To apply for any discounts or exemptions, evidence must be submitted to the DVLA as part of an application.

Used cars

According to First Response Finance, second-hand vehicles are often subject to lower tax fees compared to brand-new models. This is because motorists avoid paying the inflated first-year fee which can soar to over £2,600 for the most polluting models.

Vehicles with a list price of over £40,000 are also subject to an extra £390 on top of the existing £180 charge.