Administrative amendment to Vehicle Excise Duty expensive car supplement
Published 3 March 2021
© Crown copyright 2021
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/administrative-amendment-to-vehicle-excise-duty-expensive-car-supplement/administrative-amendment-to-vehicle-excise-duty-expensive-car-supplement
Who is likely to be affected
Registered keepers of cars paying the Vehicle Excise Duty supplement for cars with a list price of over £40,000.
General description of the measure
Since April 2017, cars with a list price exceeding £40,000 pay an additional supplement as well as paying the standard rate, which means those who can afford the most expensive cars pay more than the standard rate imposed on other drivers.
The expensive car supplement is paid in addition to the standard rate for a period of five years from the start of the second vehicle licence but for a period of no longer that six years from when the vehicle was first registered.
As a vehicle can change hands or be declared off-road through a Statutory Off-Road Notification (SORN), the vehicle licence end date and the expensive car supplement end date will not always align.
This measure will make an administrative amendment to Vehicle Excise Duty legislation to ensure that where the vehicle licence end date and the expensive car supplement end date do not align, registered keepers of cars in their last year of paying the expensive car supplement are issued correct Vehicle Excise Duty refunds when required.
Policy objective
This measure ensures that registered keepers of cars with a list price of over £40,000 are issued with the correct annual Vehicle Excise Duty refund if they sell their vehicle or make a SORN in the last year of the vehicle being liable to pay the expensive car supplement.
Background to the measure
The administrative amendment to Vehicle Excise Duty legislation to ensure correct refunds are issued was announced at Budget 2021 and will be legislated for in Finance Bill 2021.
Detailed proposal
Operative date
The change in the law will apply from 1 April 2021.
Current law
Part I, Section 19 (3A) of the Vehicle Excise and Registration Act 1994 (VERA) provides for a rebate of Vehicle Excise Duty. The relevant amount is equal to one-twelfth of the annual rate of duty chargeable on the licence (at the time when it was taken out) in respect of each complete month remaining on the licence.
Proposed revisions
Where a vehicle is subject to Schedule 1, Part 1AA, Paragraph 1GE (Higher rates of duty: vehicles with a price exceeding £40,000), legislation will be introduced in Finance Bill 2021 to amend Part I, Section 19 (3A) of VERA, so that the rebate amount is equal to the amount of months remaining at the higher rate of duty and the amount of months remaining at the standard rate.
Summary of impacts
Exchequer impact (£m)
| 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|
| - | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact and supports the Exchequer in its commitment to protect revenue.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
Individuals will not need to do anything differently compared to what they do now.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be equalities impacts in relation to any groups sharing protected characteristics.
Impact on business including civil society organisations
Businesses or civil society organisations will not need to do anything differently compared to what they do now.
Operational impact (£m) (HMRC or other)
This measure is expected to have a negligible operational impact.
Other impacts
This measure is designed to ensure correct Vehicle Excise Duty refunds are issued and so will not influence vehicle purchasing decisions. It is therefore not expected to have any environmental impacts.
Other Impacts have been considered and none has been identified.
Monitoring and evaluation
This measure will be evaluated and monitored by the Driver and Vehicle Licensing Agency (DVLA) and HMT.
Further advice
If you have any questions about this change, contact the Energy and Transport Taxes Team at the following email address: ETTAnswers@HMTreasury.gov.uk.