Government postpones new VED regime for vans and motorhomes

The Government has halted plans to introduce a new graduated system of Vehicle Excise Duty (VED) for light goods vehicles or motorhomes from April 2021, to avoid distracting the automotive sector and businesses more widely from the challenges they currently face from the Covid-19 pandemic.

BVRLA Senior Policy Advisor Thomas McLennan responded to the Government’s VED announcement; "We welcome HM Treasury’s confirmation that motorhomes will continue to be classed as Private/Light Goods for Vehicle Excise Duty purposes and are supportive of the Government’s decision to scrap its plans to introduce a new graduated VED scheme from April 2021.”  

“This would have placed additional burdens on businesses already facing a great number of challenges.” 

As part of the same announcement, the Government also confirmed a year-long extension to the temporary increase of the Annual Investment Allowance (AIA). The AIA provides firms 100% same year tax relief on qualifying capital expenditure, up to a fixed limit. Instead of allowing the AIA to revert to £200,000 from 1 January 2021, the Government is extending the temporary £1 million cap set at Budget 2018 until 31 December 2021.  

The AIA announcement: 

  • Responds to the needs of business, giving enhanced tax relief on plant and machinery expenditure, 
  • Provides businesses with upfront support during continuing Covid-19 related uncertainty, 
  • Simplifies taxes for the 99% of businesses investing up to £1 million on plant and machinery assets each year. 

See Jesse Norman's statement on the UK Parliament website

See the BVRLA’s taxation campaigns website page.