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, including those related to Car Tax.

Classic Cars: A Cornerstone of British Heritage

As the classic car industry evolves, issues surrounding Car Tax are becoming increasingly pertinent, demanding attention from both the public and policymakers. Ensuring that classic car enthusiasts are aware of Car Tax regulations is essential for the longevity of this cherished sector. The implications of Car Tax could significantly impact collectors and restorers alike.

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.

A Growing but Ageing Community

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

Fears Over Potential Car Tax Changes

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”

The Path Forward: Strategy for Sustainability

To ensure that the roar of a vintage engine isn’t silenced by modern regulation, the industry must evolve through three key pillars:

• Greener Miles: The rise of synthetic fuels (e-fuels) offers a lifeline. By adopting carbon-neutral fuels, the community can drastically reduce the environmental footprint of internal combustion engines without stripping away their mechanical soul.
• The Skills Pipeline: We are currently seeing a “generational hand-off.” Investment in specialized apprenticeships is vital to ensure that the secrets of English wheeling, lead loading, and period-correct engine tuning are passed from master craftsmen to a new, diverse generation of technicians.
• Legislative Advocacy: Clearer distinctions between “daily drivers” and “heritage assets” are necessary. Adaptive policy, such as exemptions from certain urban emission zones for historic vehicles, acknowledges that these cars cover negligible annual mileage compared to their modern counterparts.

A Cultural Anchor

Beyond the balance sheets, classic cars serve as rolling museums. They are a tangible link to Britain’s industrial zenith, representing an era where form and function were balanced with artistic flair. From the village green concours to the high-octane atmosphere of the Goodwood Revival, these vehicles act as social catalysts, bringing together enthusiasts from all walks of life.

“To preserve a classic car is to preserve a moment in time; it is an act of stewardship that honours the innovators of the past while inspiring the engineers of the future.”

By viewing the classic car sector not as a relic of the past, but as a vibrant, multi-billion pound “heritage economy,” the UK can protect a legacy that is as much about people and passion as it is about pistons and paint.