Classic cars aren’t just "old" cars - they tell stories of automotive history. But what exactly makes a car a "classic"? In this article, we’ll explore what defines a classic car, when cars qualify as "classic" for insurance and tax purposes, and take a look at the most desirable models, current modern classics, and our predictions for future models to keep an eye on. Whether you're a collector, enthusiast or just curious, this guide will show you why classic cars are so special.
In the UK, the definition of a classic car varies depending on the purpose. HMRC considers a car "historic" and eligible for tax exemption if it's 40 years or older, regardless of its condition or value.
However, insurance providers often classify cars as a classic if they are around 15 to 20 years old, provided they have a high market value (typically £15,000 or more) and are in good condition. This is because insurers focus more on a car's value and limited use rather than just age, allowing newer models that are considered valuable to qualify as classics.
The differences in these definitions reflect HMRC's focus on preserving automotive history, while insurers prioritise value and condition for coverage purposes.
Car insurance providers have specific criteria to determine when a vehicle qualifies as a "classic." While each insurer may have slightly different requirements, there are several key factors that are commonly considered when classifying a car as a classic.
Age of the Vehicle: Typically, a car is considered a classic if it is 15 to 20 years old. However, some insurers may classify a newer car as a classic if it is rare or highly desirable.
Market Value: Insurers often require a car to have a market value of £15,000 or more. This ensures that the car is a collector's item and is worth insuring for its full value.
Storage Considerations: Classic cars must be stored in a secure garage or protected environment. Insurers want to ensure that the car is well-maintained and not exposed to the elements, reducing the risk of any damage or theft.
How It’s Used: Classic cars are usually insured under policies that have a limit on their annual mileage, often under 5,000 miles. Insurers typically prefer the car to be used for occasional drives, car shows, or as a collector’s item rather than be used daily.
HMRC considers a car to be a "historic vehicle" and eligible for tax exemption when it reaches 40 years of age. This is based purely on the car's age and not its condition or market value. The tax exemption applies to vehicles that were first registered 40 years ago or more, with eligibility determined by the car’s age on 1st January of the year the exemption is applied for.
Once a car reaches 40 years old, it also qualifies for free road tax under the historic vehicle tax class, meaning the owner is no longer required to pay annual road tax. This offers a significant financial advantage for classic car owners. However, it’s important to note that some modifications can impact this eligibility. If the car has been substantially modified, such as an engine replacement or major changes to the body it may lose its tax-exempt status and could still be liable for road tax.
While owners of cars over 40 years old benefit from road tax exemption, they still need to consider other expenses such as insurance, maintenance, and MOT testing. Classic cars over 40 years old are typically exempt from MOT tests unless they’ve been significantly modified.