Classic And Niche Car Tax worry As Rachel Reeves plans budget release

The UK’s classic car sector continues to play a vital role in the nation’s economy, contributing an impressive £7.3 billion every year, according to new research from the Federation of British Historic Vehicle Clubs (FBHVC). However, industry experts are warning that the sector needs stronger support as potential tax changes loom.

The 2025 National Historic Vehicle Survey (NHVS) reveals that the average classic car owner spends around £4,567 annually maintaining and enjoying their vehicle. With nearly two million historic vehicles registered across the UK and 9.7 million Britons expressing a desire to own one, the passion for motoring heritage remains strong.

The survey also highlights the cultural significance of classic cars, with 22.7 million people viewing historic vehicles as an important part of Britain’s national identity.

While the number of historic vehicle owners has risen modestly, up by around 7,000 since 2020 and almost 200,000 since 2015, the FBHVC notes that the average owner is now 66 years old. This ageing demographic underscores the need to inspire younger generations to engage with the hobby and the industry.

FBHVC Chairman David Whale stressed the urgency of this issue, saying it is “critical that appropriate training is available to support the next generation of engineers and restorers.” The historic vehicle sector currently supports 34,500 jobs and 2,700 specialist businesses across restoration, maintenance, parts supply, museums and events.

“We cannot take that success for granted,” Whale said. “The average owner is now in their sixties and we urgently need to inspire and train the next generation.”

He also called for greater diversity and inclusion within the community, encouraging businesses to invest in apprenticeship schemes and long-term training initiatives.

Currently Drivers are exempt from paying tax on classic and investment cars if they are over 40 years old

The industry’s future could be further challenged by potential tax reforms in the upcoming Autumn Budget. Shadow Transport Secretary Richard Holden has warned that Chancellor Rachel Reeves may consider changes to motoring taxation as part of efforts to address a £50 billion fiscal shortfall.

Holden expressed concern that the government could end the 40-year Vehicle Excise Duty (VED) exemption, which currently means cars registered before 1985 are not required to pay road tax. He emphasised that protecting the classic car sector is a “priority,” warning against any form of “tax grab” that could undermine this historic and economically valuable industry.

In response, a HM Treasury spokesperson stated:

"The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to our tax policies"

As the UK continues to navigate the balance between economic pressures and environmental commitments, the classic car community faces a pivotal moment. Ensuring that these vehicles and the skilled craftsmanship behind them continue to thrive will require collaboration, investment and recognition of their enduring contribution to Britain’s cultural and economic landscape.

Protect your passion with VINTTRO Cover.
Speak to our specialist team today about insuring your niche or claissc car on 0333 4042 007