What’s happening with VED? Latest Update

Currently, most newly registered motorhomes pay Light goods vehicles (TC39) Vehicle Excise Duty (VED) rates of £260/year. This is because motorhomes (unlike cars) are built, or modified, in stages and the final manufacturer cannot provide an emissions figure for that vehicle. Other vehicles (and some motorhomes) pay VED based on their CO2 emissions. VED rates for vehicles based on their emissions range from £0 for zero emission vehicles up to £2,135 for the most polluting vehicles.

• From 1 September 2019, EU regulation 2018/1832 requires that all new sales of Light Commercial Vehicles be subject to type approval and must provide a vehicle emissions figure. This means that from 1 September 2019 all motorhomes in M1SP (special category) will be taxed based on their emissions – this can be up to £2,135 for the first year for the most polluting vehicles (and £140/year thereafter). This will affect new vehicle registrations from that point on, and not older vehicles already registered.

• Some industry groups have called on the Government to make an “urgent minor amendment to the Finance Bill, to reclassify motorhomes as commercial vehicles for the purpose of VED. The National Caravan Council has a campaigns webpage which lists their position statement and supplies evidence in support of this position. HM Treasury have not indicated any intention to make such changes. Sign the petition on the Fair Motorhome Tax website.

Vehicle Excise Duty (VED) Vehicle Excise Duty (VED) is an annual tax levied on most types of vehicles which are to be used (or parked) on public roads. Since 2003, VED rates have been linked to emissions. Major reforms to VED were announced in the 2015 budget, and took effect from 1 April 2017. These reforms linked first year VED payments to CO2 emissions, but removed that emissions link for payments in subsequent years.

VED for new motorhomes For the purposes of VED, all new motorcaravans, motorhomes and camper vans should fall in category M1SP (Special Purpose). Gov.uk explains that for cars (and some motorhomes in the M1SP category) registered on or after 1 April 2017, owners must pay a VED rate based on the vehicle’s CO2 emissions the first time it’s registered (up to £2,135 for most polluting vehicles £0 for zero emissions) and £145/year thereafter (unless the vehicle is a zero emission Electric vehicle). 2 Presently, most motorhomes do not have a ‘type approval certificate’ (this might be called a ‘certificate of conformity’ or ‘individual vehicle approval’) detailing the vehicle’s CO2 emissions (see box 1 for reasons why). Consequently, they cannot be taxed based on their emissions. Motorhomes without this detail (in the M1SP category), pay tax in a different way. These vehicles pay Light goods vehicles (TC39) VED rates of £260/year. Box 1: Why do motorhomes not have an emissions value? Unlike cars, most motorhomes are not made by a single company, but are built in stages by at least two companies. There is a requirement that after the completion of each stage, the company involved should produce a document called the Certificate of Conformity (CoC). The company involved in the final stage CoC has the option of filling in the exhaust emission CO2 figures. Presently, the overwhelming majority of final stage converters are unable to do this and there is no legislative requirement for them to do so.

What’s changing from 1 September 2019?

Commission Regulation (EU) 2018/1832 amends existing regulations to (amongst other things) require new light passenger and commercial vehicles to comply with certain emission limits 2 Vehicle Tax rates, GOV.uk, [accessed: 8 Aug 2019] 3 Commons Library Briefing, 6 September 2019 and lays down additional requirements on access to vehicle repair and maintenance information. This change is part of the Commission’s work to introduce tougher tests for emissions.

The testing requirements, which are intended to mimic ‘real-life’ driving conditions, have been brought in to prevent manufacturers from cheating emissions tests in response to the ‘Dieselgate’ emissions scandal. The old lab test – called the New European Driving Cycle (NEDC) – was designed in the 1980’s. Due to evolutions in technology and driving conditions, it became outdated. The European Union has therefore developed a new test, called the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). The 2018 Regulation is being phased in: • For passenger vehicles (M type and Category N1 (i)): ─ From 1st September 2017, all new model introductions were subject to WLTP type approval and Real Driving Emissions (RDE) testing. ─ From 1st September 2018, all new sales received type approval under WLTP. ─ From 1st September 2019, all new registrations will be subject to RDE testing.

Altogether, this will mean motorhomes will no longer be taxable as light goods vehicles. The new requirement for emissions information to be provided on the type approval, will make all motorhomes eligible to be taxed based on their emissions. This could result in much bigger first year VED bills for the most polluting vehicles. The National Caravan Council (NCC) – an industry body – says “it was not anticipated that for multi-stage vehicles the end-stage manufacturer would be required to undertake very costly emission tests for low volume production” as part of the introduction of WTLP that could lead to a 705% increase in VED.

Read more about the research briefing here.