Vehicle Excise Duty rates for cars, vans and motorcycles from April 2024
Published 22 November 2023
© Crown copyright 2023
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/vehicle-excise-duty-rates-for-cars-vans-and-motorcycles-from-1-april-2024/vehicle-excise-duty-rates-for-cars-vans-and-motorcycles-from-april-2024
Who is likely to be affected
Owners of cars, vans, motorcycles, and holders of motorcycle trade licences.
General description of the measure
This measure will uprate the Vehicle Excise Duty (VED) rates for cars, vans, motorcycles and motorcycle trade licences by the Retail Prices Index (RPI). This is a standard uprating to come into effect from 1 April 2024.
Policy objective
Increasing VED rates by RPI in tax year 2024 to 2025 will ensure that VED receipts are maintained in real terms and that motorists make a fair contribution to the public finances.
Background to the measure
This measure was announced at Autumn Statement 2023.
VED is a tax on vehicles used or kept on public roads and rates depend on the vehicle type, its characteristics such as emissions and its date of first registration. VED rates have increased in line with inflation since 2010.
Detailed proposal
Operative date
The measure will have effect on and after 1 April 2024 for all cars, vans, motorcycles and motorcycle trade licences.
Current law
Section 1 of the Vehicle and Registration Act (VERA) 1994 provides for the charging of VED.
Section 2 of VERA 1994 provides that VED in respect of a vehicle of any description is chargeable by reference to the applicable rate specified in Schedule 1 to VERA 1994.
Proposed revisions
Legislation will be introduced in Autumn Finance Bill 2023 to amend the applicable rates for cars, vans, motorcycles and motorcycle trade licences specified in Schedule 1 to VERA 1994. Full details of the new rates are given in Annex A to the Overview of Tax Legislation and Rates.
Summary of impacts
Exchequer impact (£ million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| — | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
The measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will impact on motorists owning a car, van or motorcycle or using a motorcycle trade licence. The increase in VED rates is in line with RPI meaning rates will remain unchanged in real terms for vehicle owners.
The measure is not expected to impact on family formation, stability or breakdown.
Customer experience is expected to remain broadly the same as this measure does not make any changes to the operation of the tax.
Equalities impacts
This measure will affect those with protected characteristics who are registered keepers of cars in the same way as it affects all keepers of cars.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses which own or sell vans, car or motorcycles, by changing their VED liabilities. One-off costs include familiarisation with the rate change. There are not expected to be any continuing costs.
There is expected to be no impact on civil society organisations.
Customer experience is expected to remain broadly the same as this measure does not make any changes to the operation of the tax.
Operational impact (£ million) (HMRC or other)
There will be negligible financial impact on operational costs for the Driver and Vehicle Licensing Agency (DVLA) and no additional administrative costs for affected car, van or motorcycle drivers.
Other impacts
VED is designed to encourage the uptake of lower emission vehicles. From 1 April 2017, a reformed VED system was introduced for new cars, with zero emission models paying no VED at first registration or subsequently, whilst the most polluting pay over £2,500 at first registration and a flat rate thereafter. This measure will therefore maintain the environmental signal as it will increase VED rates in line with inflation.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through the DVLA vehicle licensing data, as well as through regular communication with relevant stakeholders across government and in industry.
Further advice
If you have any questions about this change, contact the Energy and Transport Taxes Team by email at: ETTAnswers@HMTreasury.gov.uk