Old cars are punctured by Brown's classic move

THE FORMER chancellor, Kenneth Clarke, became the patron saint of classic car drivers after exempting motor vehicles (including cars, lorries, buses and motorcycles) more than 25 years old from paying the annual road fund licence in his 1995 Budget.

Now Gordon Brown has made himself a candidate for a classic hate figure in the classic car movement. Tucked away in the small print of the Budget was a clause restricting the exemption in future to cars that were registered up to and including 1972.

Cars registered in 1973 that owners were hoping would qualify for tax exemption next January (cars, like racehorses, are deemed to have their birthdays on 1 January regardless of their actual date of production) will not now become exempt, dashing the hopes of tax-free motoring for an estimated 15,000 owners of 1973 cars still on the road. Each following year will add to the army of owners who will still have to pay if they want to keep their old cars on the road.

The new rules will save the revenue just over pounds 2m, but the Chancellor's aim has little to do with revenue raising. The decision to stop the rolling exemption is intended to discourage drivers from keeping old cars on the road on the grounds that they pollute the environment, a claim that classic car owners vigorously dispute.

The new rules may persuade some owners to scrap cars that will no longer qualify for exemption from the road fund tax, and will have a significant impact on classic car prices. In time they will create a new category of "classic" cars reflecting their tax-exempt status. But the cut-off date will inevitably create anomalies. Several popular models, including the MGB and Midget and the Mark 3 Cortina were in production before and after the cut-off date, and models built in 1972 and earlier will now become considerably more desirable than identical models of the same vehicle constructed in and after 1973.

Car enthusiasts claim that the change is unnecessary because the leaded petrol used by most pre-1980s cars will be withdrawn from sale in 2000, and classic cars will then have to convert to lead-free fuel or use lead substitutes anyway.

Owners of large cars may be hit again by proposed changes in duty rates next year cutting the tax on cars with "small, clean engines" and penalising cars with engine capacities of, perhaps, 2 litres or more.