Could you save money on your car costs?

Got an old banger? You could save up to £295, says Paul Lewis

Published: March 21, 2022 at 4:10 pm

If you drive a car first registered in 1981 or earlier, you can get exemption from Vehicle Excise Duty (VED – usually called “car tax”). That will save you £180 a year from April – or £295 if it has an engine over 1,549cc. A vehicle that is at least 40 years old does not usually need an MOT test certificate, either.

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The tax exemption applies to cars, vans and motorcycles from after they reach 40 years old. So this year it applies to vehicles made before 1982 or registered before 8 January 1982. You cannot claim the exemption until 1 April, however, which means you have already used the car for four months and you will not get a refund for that time. Vehicles used for business, including taxis, do not get the exemption.

You can’t claim online: you must go to a Post Office and take the form V5C – what we used to call the “log book”. If you have had a VED reminder (form V11), take that, too. You will need to show an insurance certificate and a current MOT certificate, or a form called V112,
which is a declaration by you that your vehicle does not need an MOT – see below.

The V5C will be kept by the Post Office and sent to the DVLA, which will return it updated in a few weeks. You will also get a refund for any whole months of tax that fall after the exemption was granted.

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The DVLA warns that it may take a while to return certificates and process refunds, but you can carry on driving while waiting. Every year you’ll be sent a reminder to tax your car – which you must do, either online or on the paper form, even though the cost is shown as £0.00.
Otherwise, you face an £80 fine.

Vehicles over 40 years old are also exempt from the MOT test, as long as no substantial changes have been made. Every vehicle must be roadworthy, though, so it’s a good idea to have a voluntary MOT once a year, anyway.

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Paul Lewis presents Money Box on Radio 4. QUESTIONS? Send any questions to Paul.Lewis@radiotimes.com. Paul cannot answer you personally, but will reflect them in his column

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