Vehicle Excise Duty rates for cars, vans, motorcycles and motorcycle trade licences
Published 16 March 2016
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Who is likely to be affected
Owners of cars, vans, motorcycles and holders of motorcycle trade licences.
Policy objective
Increasing Vehicle Excise Duty (VED) rates by RPI in 2016 to 2017 would ensure that VED receipts are maintained in real terms and that motorists make a fair contribution to the public finances.
Background to the measure
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 come into effect for all vehicles on 1 April 2016.
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 2016 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 B to the Overview of Tax Legislation and Rates
Summary of impacts
Exchequer impact (£m)
| 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|
| 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 would impact on motorists owning a car, van or motorcycle or using a motorcycle trade licence. Approximately 98% of motorists owning a car first registered after March 2001 (post-2001 car) would pay no more than £5 extra VED. Owners of post-2001 vans and pre-2001 cars and vans would pay approximately £5 extra in VED.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure will have no differential impact on any equality groups.
Impact on business including civil society organisations
The measure is expected to have negligible impact on businesses’ and civil society organisations’ administrative burdens as they familiarise themselves with the rate change but the cost of some vehicle licences will rise.
Operational impact (£m) (HMRC or other)
There will be negligible 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 at: Contact DVLA