As part of the spring Budget, Chancellor Philip Hammond is increasing Vehicle Excise Duty (VED) rates for cars, vans and motorcycles registered before April 2017 in line with Retail Prices Index (RPI), estimating to cost individuals no more than £5 extra in VED
Legislation will be introduced in Finance Bill 2017 to amend the applicable rates.
The VED rates have increased to ensure that motorists make a fair contribution to the public finances in line with the RPI.
Increasing the rates is expected to have no cost impact on the Exchequer. Approximately 98% of individuals owning a car first registered after March 2001 but before 1 April 2017 will not have to pay no more than £5 extra VED and owners of vans and pre-2001 cars will pay £5 extra.
VED rates are graduated based on the vehicles’ CO2 emissions as an incentive for people to purchase more efficient cars.
HMRC’s policy paper on Vehicle Excise Duty: increase in rates for cars, vans, motorcycles and motorcycle trade licences is available here.
