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The DVLA have confirmed that this is how it will work. Those of us with well over 25 year old cars will automatically receive a refund application. Complete this and send it back to the DVLA. Do not send back the tax disc. Keep this on your car until it expires. You will be sent a tax reminder and you relicence yor vehicle in the normal way, but pay no money. So you will get a tax disc and the law that insists that a tax disc is always displayed continues. You will receive your refund after about six weeks.
The 25 year age of the car is calculated from 31st December of the year it was first registered, ie from 1st January 1970 vehicles will become exempt and so on.
If you are confused please direct your questions to
Customer Enquiries (Vehicles) Unit
Swansea SA99 1BL
Tel: 01792 772134 (8:15 am to 4:20pm Mon-Fri)