Tax exemption was 25 years rolling until 1998 but since then it has been fixed at 31 12 1972. It is not at all clear whether a change of government would result in the system reverting back to the rolling system seen under John Major.
However, if you fit a more modern engine, the car may not then be considered "Historic" and could even end up on a Q plate, in which case it is subject to road tax. In the past the authorities have been quite lax when dealing with this sort of thing. I know of a Morris Minor and a Ford Anglia, both of which have Ford Zetec or Cosworth engines, yet both are on period plates and tax exempt.
If I were going to look at making a seriously quick Minor, I would think of retaining the A Series engine and fitting a supercharger (Or turbo - the factory Metro turbo system was well sorted) or possibly the KAD 16 valve head (
http://www.kad-uk.com/). I remember a Minor using this set up and it was quick. When the same engine was put into a Lotus 7, it became a Cosworth killer in the up to 1400cc hillclimb class (Though the Talbot brothers were both accomplished drivers). As the cyclinder block would still be A Series, you could still have a period engine number - the 1275 Midget engine in my Traveller is older than the car.
I don't know how a 1980 Ital 1.3 engine would be viewed. If we were still on rolling 25 year tax exemption, a 1980 Ital would itself be historic. According to FIVA, said 1980 Ital would be historic next year but the present government appear not to recognise this definition. So far I don't think its been an issue but it raises an interesting question.
