Vehicle Excise Duty: rates for cars, vans, motorcycles and motorcycle trade licences
Published 29 October 2018
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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 2019.
Policy objective
Increasing VED rates by RPI in 2019 to 2020 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 2018.
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 2019 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 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 2018-19 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 (£m)
| 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|
| 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.
Equalities impacts
This measure will impact those sharing protected characteristics which are representative of all registered keepers of cars. In 2017, the Department for Transport published data which showed that women account for 39% of registered keepers.
Impact on business including civil society organisations
The measure is expected to have a negligible impact on businesses’ and civil society organisations’ administrative burdens as they familiarise themselves with the rate change.
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.