Section 195: Ved Rates for Light Passenger Vehicles, Light Goods Vehicles, Motorcycles Etc
Summary
1.Section 195 provides for changes to certain rates of vehicle excise duty (VED) by amendment of the Vehicle Excise and Registration Act 1994 (VERA). Changes to the rates take effect in relation to vehicle licences taken out on or after 1 April 2012.
Details of the Section
2.Subsection (2)(a) amends paragraph 1(2) of Schedule 1 to VERA to increase the general rate of duty by £5 to £220 except for vehicles with an engine size of 1549cc or less.
3.Subsection (2)(b) amends paragraph 1(2A) of Schedule 1 to VERA to increase the general rate of duty by £5 to £135 for vehicles with an engine size of 1549cc or less.
4.Subsection (3) amends paragraph 1B of Schedule 1 to VERA to change most of the graduated rates of duty which apply generally to light passenger vehicles first registered on or after 1 March 2001. Table 1 provides the rates payable on a first vehicle licence for a vehicle and table 2 provides the rates on all other licences for a vehicle registered on or after 1 March 2001. Table 2 operates so that vehicles emitting over 225 grams of carbon dioxide per kilometre that were registered in the United Kingdom or overseas before 23 March 2006 pay a lower rate than those registered from 23 March 2006 onwards.
5.Subsection (4)(a) amends paragraph 1J(a) of Schedule 1 to VERA to increase by £5 to £215 the rate of duty for Light Goods Vehicles which are not lower-emission vans.
6.Subsection (4)(b) amends paragraph 1J(b) of Schedule 1 to VERA to increase the rate of duty for lower-emission vans by £5 to £135. Lower-emission vans are models which met the Euro 4 air quality pollutant emissions standard early and were registered on or after 1 March 2003 and before 1 January 2007, or that met the Euro 5 air quality pollutant emissions standard early and were registered on or after 1 January 2009 and before 1 January 2011.
7.Subsection (5)(a) amends paragraph 2(1)(b) of Schedule 1 to VERA to increase the rate of duty by £1 to £36 for motorbicycles with an engine size of over 150cc but not more than 400cc.
8.Subsection (5)(b) amends paragraph 2(1)(c) of Schedule 1 to VERA to increase the rate of duty by £2 to £55 for motorbicycles with an engine size of over 400cc but not more than 600cc.
9.Subsection (5)(c) amends paragraph 2(1)(d) of Schedule 1 to VERA to increase the rate of duty by £2 to £76 for motorbicycles with an engine size over 600cc, for motortricycles with an engine size over 150cc and for trade licences for motorcycles.
10.Subsection (6) provides that all new rates under this section will take effect for licences taken out on or after 1 April 2012.
Background Note
11.The rate of Vehicle Excise Duty (VED) chargeable on vehicles is dependent on various factors including the vehicle type, engine size, date of first registration and exhaust pipe emissions data. The rate applying to cars registered on or after 1 March 2001 is generally determined by the vehicle’s carbon dioxide emissions. A reduced rate of VED applies to cars using alternative fuels or featuring a hybrid fuel-electric powertrain. Alternative fuels include Liquefied Petroleum Gas, Compressed Natural Gas and high blend (at least 85 per cent content) bioethanol.
12.The rate applying to vans registered on or after 1 March 2001 is lower if the van met reduced pollution requirements early, that is, before certain emissions requirements became mandatory for new vans.
13.Cars and vans registered prior to March 2001, and all motorcycles, are taxed by reference to the engine size.
14.This year the Government intends to increase VED rates by no more than inflation. VED rates for Heavy Goods Vehicles (HGVs) and buses are frozen.
15.The changes in rates apply to all vehicle licences taken out on or after 1 April 2012 regardless of the commencement date on the licence.