Budget 2015: Flat rate road tax introduced

Author: Oli Rushby Posted: 08 Jul 2015

It could be more expensive to ride from 2017

Motorists will be hit hard in the next five years after the Government’s 2015 budget reveals the introduction of a flat rate of vehicle tax from 2017, which has given rise to questions about whether the same is likely to happen for bikes. 

On a brighter note, fuel duty will remain frozen for the foreseeable future and new motorcycles will be able to run for an extra year (four not three) before needing an MOT.

Road tax is set to soar for new vehicles from 2017. Vehicle Excise Duty for new cars registered after April 01, 2017 will be set at a flat rate of £140, with the exception of the first year when the tax will remain linked with CO2 emissions.

Only zero emissions vehicles will be exempt from taxation meaning some new vehicles will go from a rate of nothing to £140 while drivers of the ‘most expensive’ (over £40,000) cars will continue to pay more.

Existing vehicles will not be affected so nobody will pay more for a vehicle they already own. The money raised from the new flat rate will be ring-fenced for the development and repair of Britain's roads.   

The Government’s current statement only refers to cars but should a similar flat rate be introduced for motorcycles it could significantly increase the cost of riding. 

“While the new system for 2017 will be fairer for cars, a flat-rate would not be as straightforward for motorcycles,” explains motorcycle industry expert, Craig Clarey-Clinch. “Any long-term VED reforms for motorcycles would need to take in to consideration how dynamic motorcycles are and the advantages of a motorcycle, of whatever size, in congestion and traffic.” 

Vehicle Excise Duty for motorcycles is currently rated on engine size, with costs varying from £17 per year for bikes under 150cc to £81 for anything over 600c. 

Should this system be replaced with a flat rate, in theory it could cost the same to tax a 125cc scooter as a 1000cc sports bike. 

George Osborne, Chancellor of the Exchequer, has said that 95% of cars will come under the new £140 rate; if the figures are similar for motorcycles this becomes hugely worrying. 

We put a call in to the Treasury, who at first seemed confused by our question before telling us that today’s announcement is for cars only – essentially what we already knew. We did ask whether they saw any changes for motorcycle taxation in the future, but when they asked us how motorcycles are currently taxed, we sort of lost all faith.

We're not expecting to see any change to motorcycle road tax until at least 2017, with more announcements expected over the next 18 months. 

Road tax isn’t the only cost set to soar, Insurance Premium Tax will increase by more than 50% from 6% to 9.5% from November this year meaning those insurance renewals could well be higher from then on. 

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