Bicester Motion – 26 November 2025: The UK’s classic car community has been handed long-awaited clarity as Chancellor of the Exchequer, Rachel Reeves, confirmed in the Autumn Budget that vehicles over 40 years old will continue to be exempt from Vehicle Excise Duty (VED). The announcement ends months of uncertainty and has been warmly welcomed by industry leaders, heritage organisations, and the owners of Britain’s 1.9 million classic cars and motorcycles.
More than 350,000 of these vehicles currently qualify for VED exemption, a key incentive that many feared might be withdrawn amid broader changes to motoring taxation. Instead, Reeves has reinforced the government’s commitment to preserving motoring heritage while navigating the transition toward electrification.
Mark Roper, Managing Director of Hagerty UK, described the announcement as a “significant relief” for enthusiasts and businesses alike.
“Along with the freeze on fuel duty, this is very welcome news for classic car owners and for an industry that contributes over £3 billion in direct taxes to the UK economy every year,” Roper said. “The introduction of pay-per-mile charging for Electric Vehicles and Plug-in Hybrid Electric Vehicles from 2028 was widely anticipated as the government looks to recoup lost fuel duties, but in an age of electrification, classic cars are often looked at unfairly. However, these vehicles represent the ultimate in recycled and sustainable motoring… and that’s before you consider the UK classic car industry is worth £7.3 billion, contributes £3 billion annually to the economy, and has over 100,000 jobs dependent on the sector.”
While many still associate “classic” status with mid-century icons, today’s definition includes vehicles as young as 25 years old—meaning well-loved models from the 80s, 90s and even early 2000s are now part of the UK’s thriving enthusiast landscape. Despite their number, research consistently shows that classic vehicles are used sparingly, typically as cherished items of cultural and industrial significance rather than daily transport.
This limited usage is central to the exemption’s rationale, explains Dale Keller, CEO of the Historic & Classic Vehicles Alliance (HCVA):
“Preserving the exemption aligns with the government’s wider environmental goals through maintaining vehicles whose lifecycle carbon impact is negligible compared to the manufacture of new vehicles. The tax contribution of the vehicles was made decades ago and applying the VED would be disproportionate to their use, which was the key factor in the exemption being applied in the first place.”
The HCVA’s work in championing the sector has highlighted its substantial economic value—over £7.3 billion annually—as well as its importance to UK craftsmanship, engineering, tourism, and culture.
MOT Exemption Continues, But Remains Under Review
Alongside the VED decision, Reeves also confirmed that classic vehicles will continue to be exempt from annual MOT testing. While welcomed by many, this aspect of the Budget was delivered with caution: the government will keep the exemption under review in the coming years.
Roper acknowledges the divide within the community:
“Many organisations would like to see an annual roadworthy test for older vehicles, and many classic vehicle owners choose to continue with a yearly MOT test despite exemption, as being assured of their continued roadworthiness is something to be welcomed.”
A Boost for a Growing, Evolving Sector
For industry leaders such as Hagerty and the HCVA, the 2025 Autumn Budget reinforces the importance of safeguarding both the economic and cultural pillars of the classic vehicle world. Hagerty continues to support the sector through specialist insurance products, community hubs like the Bicester Heritage Clubhouse, and much-loved events including RADwood, the Festival of the Unexceptional, and the Hagerty Drivers Club.
The HCVA—founded in 2021 to protect and promote the heritage vehicle ecosystem—continues to campaign on behalf of restorers, engineers, dealers, parts suppliers and the many small businesses that sustain the sector’s long-term future.
With the VED exemption secured, classic car owners can look ahead with renewed confidence. For enthusiasts and professionals across the UK, Reeves’s announcement ensures that the country’s vibrant heritage motoring community will continue to thrive—preserving the vehicles, skills, and stories that define more than a century of automotive history.
