H.M. TREASURY

EXPLANATORY NOTE

CLAUSE 21: INCREASE IN GENERAL RATE

SUMMARY

1. This clause provides for an increase of £5 in the reduced and standard rates of VED for cars, taxis and vans to £105 and £160 respectively, to take effect from March 1, 2001.

Changes in the standard rate will have a consequential effect on the VED rates for motorcycles, trade licences and other vehicles whose rates are linked to it in legislation.

DETAILS OF THE CLAUSE

3. Sub-section (1) substitutes the new reduced and standard rates of VED for private and light goods vehicles, £105 and £160 respectively, for the old rates of £100 and £155 respectively.

Sub-section (2) provides for these new rates to apply to all licences taken out from March 1, 2001 for vehicles in the private and light goods tax class.

BACKGROUND

There is no real-terms increase in Vehicle Excise Duty and the freeze in VED rates until March 1, 2001 will reduce the tax cost of car ownership by £110 million in 2000/01.