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The BMF has called for an overhaul of motorcycle VED rates

Motorcycle VED (Vehicle Excise Duty, better known as road tax) Increase

The BMF has called for an overhaul of motorcycle VED rates, which see some bikes paying more ‘road tax’ than cars which use more fuel and have higher carbon emissions.

BMF Chair – Jim Freeman

“This is a ‘hardy perennial’ for riders, we have received a number of comments and queries over recent years, about VED. In fact, in some sectors the current system, despite looking unfair, could be worse, a case of ‘being careful what you wish for’. The big issue, long term, is that all those zero-rated EVs, as the market expands, will reduce VED income. Which could well lead to a complete overhaul in vehicle taxation. If there’s one thing the Treasury doesn’t like, its ‘losing’ revenue.” said BMF Chair Jim Freeman.

Media scrutiny on Chancellor Rishi Sunak’s Spring Budget was focused on the 5p/litre cut in fuel duty on petrol and diesel. After a ten-year freeze on fuel duty this means we pay less tax on our fuel in real terms than ever.

However, an increase in VED (Vehicle Excise Duty, better known as road tax) slipped by almost under the radar. All motorcycle, car and van VED rates were increased by the RPI (retail price index), in line with inflation. With inflation now gathering speed, this means the annual VED for a 600cc-plus bike increases from £93 to £101.

But are motorcyclists paying more than they should? Car VED rates are based CO2 emissions of g/km (grammes per kilometre) but powered two-wheeler rates are still based on a relatively crude engine capacity banding: up to 150cc; 151-400cc; 401-600cc; and 600cc+.

This leads to some strange anomalies. It is good news for owners of litre-plus bikes, who pay the same VED as those riding an economical 650cc single. But banding system doesn’t take into account the fuel efficiency of some motorcycles. Take a frugal 125cc bike averaging 100 mpg – that equates to 67.6g/km, which for a pre-2017 car would be zero rate VED, yet the bike pays £22. A 70mpg 650 (96.5g/km) pays £101 under the new rates, compared to that zero rating for a pre-2017 car.

Post-2017 cars have a tougher VED tax regime, while electric motorcycles and scooters, as with electric cars, are zero rated. But the current VED system does appear to penalise some motorcycle – basing motorcycle VED on carbon emissions instead of engine size looks like a more level playing field.

Link to previous article here

Written by Peter Henshaw