VED rates and HGV levy

The measure

From 1 April 2021, Vehicle Excise Duty (VED) rates for cars, vans and motorcycles will increase in line with the Retail Price Index (RPI).

VED rates for Heavy Goods Vehicles (HGVs) will be frozen and the HGV Levy will be suspended for another 12 months.  


Who will be affected?

Owners and operators of vehicles that fall under the VED or HGV Levy schemes. 


When will the measure come into effect?

For cars, vans and motorcycles, changes will apply from 1 April 2021.

As a continuation of a current measure, the freeze on HGV VED rates and continued suspension of the HGV Levy will not result in a change. The HGV Levy has been suspended since 1 August 2020, and this suspension is now due to last an additional 12 months until August 2022. 

Our view

The general increase in the VED rate for cars, vans and motorcycles is as expected.

The government cites its support for the haulage sector and pandemic recovery efforts as the reason behind the freeze on HGV VED rates and further suspension of the HGV Levy.