Vehicle Excise Duty: rates for cars, vans, motorcycles and trade licences
Published 11 March 2020
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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, by the Retail Prices Index (RPI), the Vehicle Excise Duty (VED) rates for cars, vans, motorcycles and motorcycle trade licences. This is a standard uprating to come into effect from April 2020.
Policy objective
Increasing VED rates by RPI in 2020 to 2021 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 Budget 2020.
VED is paid on vehicle ownership, and rates depend on the vehicle type and first registration date. VED rates have increased in line with inflation since 2010.
Detailed proposal
Operative date
The measure will have effect on and after 1 April 2020 for all cars, vans, motorcycles, HGVs 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 provides that VED in respect of a vehicle of any description is chargeable by reference to the applicable rate specified in schedule 1 of VERA.
Proposed revisions
Legislation will be introduced in Finance Bill 20 to amend the applicable rates for cars, vans, motorcycles and motorcycle trade licences specified in Schedule 1 of VERA. Full details of the new rates are given in Annex A to the Overview of Tax Legislation and Rates.
Summary of impacts
Exchequer impact
| 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | |
|---|---|---|---|---|---|---|
| Impact | - | 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.
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 impact those in groups sharing protected characteristics which are representative of all registered 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 a change in their VED liabilities. One-off costs include familiarisation with the rate change. There are not expected to be any ongoing 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 (£m) (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.
Monitoring and evaluation
This measure will be evaluated and monitored through the DVLA vehicle licensing data.
Further advice
If you have any questions about this change, please contact the DVLA on telephone: 0300 790 6802 or online.