There’s good news for classic car owners in the 2013 budget. From 2014, the exemption from VED (road tax) will be extended to 1974. And that means all cars manufactured in 1973 – previously liable for the annual tax – will now qualify for the exemption. Also, SORNs will no longer be annual, but indefinite.

The measure, which was announced by the Chancellor of The Exchequer George Osbourne, means that cars such as the earliest MGB GT V8s (above) and Austin Allegros (below) are now considered ‘tax-free’. The VED classic vehicle exemption, which was originally introduced in 1994 to roll along at 25 years has set at a fixed date – 1 January 1973 – since 1997.

The new cut-off date for classic vehicles will take effect from 1 April 2014, and covers all cars manufactured before 1 January 1974. Although it’s not been announced that there will be a return to the pre-1997 rolling exemption, but as this comes into effect at the 40-year point, it’s a good chance that this looks to be the case.

Also in the budget, it was announced that Statutory Off-Road Notifications will no longer need to be renewed on an annual basis. It was confirmed that the Finance Bill 2013 contains this statement: ‘the Government will put off-the-road declarations onto an indefinite basis. The Government will also extend the grace period to 14 days, following the payment of tax, on the non-display of the tax disc in a vehicle.’

This logical move has been introduced to reduce tax administration costs.

Annual vehicle tax can be a significant part of a car’s running costs. The rate of road tax or, to give it its official name, Vehicle Excise Duty, is determined by a car’s CO2 emissions. The lower the CO2 emissions the less you have to pay. Some cars offer the first year free, but incur a charge thereafter. But others, if the CO2 is low enough, allow owners to renew the VED free of charge year after year. The current threshold for that is 100g/km and a surprisingly high number of cars now qualify.