Motormouse

1999 – 2022

Vehicle Excise Duty rates for cars, vans, and motorcycles from April 2022

New rules = new rates £. Worth noting that from year 2 of ownership, the RFL seems standard at £165 for everyone if your car is greater than zero co2.

Vehicle Excise Duty rates for cars, vans, and motorcycles from April 2022 – GOV.UK (www.gov.uk)

Vehicle tax rates: Cars registered on or after 1 April 2017 – GOV.UK (www.gov.uk)

Summary chart of rates by co2 emission

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 April 2022.

Policy objective

Increasing VED rates by RPI in 2022 to 2023 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 Budget 2021.

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 2022 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 Finance Bill 2021-22 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 (£m)

2021 to 20222022 to 20232023 to 20242024 to 20252025 to 20262026 to 2027
nilnilnilnilnil

This measure is not expected to have an Exchequer impact.

Economic impact

The measure is not expected to have any significant economic impacts.

The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.

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 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.

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 £2,000 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

Ready to tax your car?

Tax your vehicle – GOV.UK (www.gov.uk)

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