Motoring taxation in the United Kingdom
Encyclopedia
Motoring
taxation in the United Kingdom
comes in a variety of forms. There are fuel taxes, motor vehicle
ownership and use taxes and also a few localised tolls and road pricing schemes in operation.
There are proposals for a nationwide road tolling system.
, and this is also the case with most motoring taxes. The exception is revenue raised from congestion charges and from parking charges, which is generally reserved to fund local transportation systems, which may include some aspects of the road
system.
The two major taxes applied to motorists today in the UK are both excise duties: hydrocarbon oil duty
or fuel duty as it is more commonly known, and vehicle excise duty
.
). The price of fuel for steam engines had been subject to local coal duties
until their abolition in 1889, and centrally controlled during World War I
and World War II
.
The 1903 motor-car act introduced the £1 registration fee for each motor vehicle, which were already also subject to carriage duty if they were not used solely for trade. Carriage duty was paid for a carriage licence which cost £
2 2s. (£2.10) for vehicles weighing up to 1 ton, and £4 4s. (£4.20) for vehicles over 1 ton.
A new duty was introduced in 1909 on "motor spirit" (imported petrol), leaving alternative fuels duty-free. The original 1909 rate was 3d
per imperial gallon.
The Road Fund Licence (later renamed as Vehicle Excise Duty) was introduced in 1921 as way to collect money for a Road Fund, in order to maintain and improve roads which had suffered as a consequence of the Great War. It was intended as charge that could be levied regardless of the fuel used to power a vehicle. The Minister of Transport was responsible for collecting and spending the money collected although in later years the Treasury assumed responsibility for the allocation of funds.
Increased transportation of freight by heavy road vehicles also increased the wear on roads and led first to a "wetted tax" for steam road locomotives, followed by the adoption of the recommendations of the Salter Report
of 1933 for all heavy vehicles. This addressed a perception that the free use of roads was unfairly subsidising the railway's competitors, through the introduction of an additional axle weight duty within the VED in order to charge commercial motor vehicles for the costs they generated. There were exceptions for vehicles that seldom used public roads, such as agricultural tractors. This annual duty was payable by all road hauliers in proportion to the axle load and had the effect of removing many heavy steam-powered vehicles from the road. It was accompanied by changes in legislation that relieved local authorities of some of their costs through new abilities to set weight and speed limits.
The revenues from the new centralised funding mechanisms later allowed the government to consider a national network of roads under the Trunk Roads Act of 1936.
In March 1962, motoring organisations appealed to the Chancellor of the Exchequer
to reduce the "disturbingly high cost of motoring" by cutting motoring taxation in the forthcoming budget. Motoring tax revenue had risen from £131 million in 1950 to £730 million in 1961-62.
By February 1966 annual motoring taxation revenue had reached £1 billion, and the Royal Automobile Club
were calling for an end to the "crippling spiral of motoring taxation", stating that less than one-third of the revenue was spent on road improvements.
The measurement and coverage of duties have expanded over time to encompass most types of powered vehicle and different types of fuel. This arrangement of duties, under various names, formed the basis of the UK's road taxation policy for most of the century. The policy had general acceptance until the fuel protests of 2000 halted the practice of increasing duty at a rate above inflation
. In spite of these protests, the country's economy and motorists' behaviour has generally become less sensitive to the price of fuel at the pump, with economists now estimating it to have a price elasticity of approximately -0.24, (thus an economist would expect that a doubling of the fuel price would only stop a quarter of journeys.)
The significance of other types of charging as a policy instrument has become more important over time. Using fuel duty as the primary instrument of road policy was not challenged until the Smeed Report
of 1962 suggested the use of congestion charging mechanisms, which were not introduced until decades later.
Since 2002 policy cues have been given using the income tax
system to encourage the purchase of company cars with low emissions.
is applied in addition as a percentage of the combined total. There is a fuel duty rebate available for bus operators
.
In May 2008, UK fuel taxes were the highest in Europe.
The government revenue from fuel duties was £25.894 billion in 2009, with a further £3.884 billion being raised from the VAT on the duty.
, which is more commonly known as a tax disc, on display. In most cases, the payment of an annual vehicle excise duty (also known as road tax, car tax or road fund licence) is required to obtain the tax disc, although for some classes of vehicle there is no fee. The tax disc must be prominently displayed on the vehicle, however enforcement is now most often achieved via ANPR referencing a central computerised database, rather than through visual checking.
Since 1999, the duty has been levied according to the CO2
emissions, starting with a reduced rate of £50, the scheme was extended into a graded system in 2001, with the rates being changed in 2006.
The government revenue from vehicle excise duties was £5.63 billion in 2009.
Since 2003 most vehicles entering parts of Central London
have been required to pay a daily charge under the London congestion charge
. Having won the first mayoral election in 2000, Ken Livingstone
opted to exercise available powers to introduce congestion charging in London, and charging commenced on 17 February 2003. An extension of the zone into West London came into effect on 19 February 2007. Since 4 July 2005 the normal daily charge has been £8. The total receipts from the London Congestion Charge for 2006-07 was £213 million (provisional figures), which, after operating costs, left £123m of hypothecated revenue for London transport schemes.
It has been postulated that, if the capital costs to set up the scheme were accounted for up front, a total of £10m revenue has been raised for Transport in London over five years of operation.
construction debt was paid off, which should have resulted in the scrapping of the toll fee to cross. However, the government decided to continue to charge most crossing users to keep congestion levels down. Ironically, since the upgrading of the crossing doubled capacity in terms of road lanes, but did not add extra toll booths, it is the toll booths themselves that are responsible for lengthy queues at peak times, and removal of the booths would almost certainly reduce congestion. As with congestion charging schemes, all proceeds must be used for transport purposes. In one year this money amounted to £60 million.
proposed the introduction of a variable congestion charge
. Similarly to vehicle excise duty
(VED), it would be based on emissions of carbon dioxide in grams/km. This would reduce or eliminate the charge for small and fuel-efficient vehicles, and increase it to up to £25 a day for large, inefficient vehicles such as SUVs, large saloons and compact MPV
s with a Band G VED rating, that is, emissions of > 225 g/km of CO2. Electric zero-emissions vehicles are already exempt from the charge. Transport for London
introduced a low emission zone
throughout nearly all of Greater London
on 4 February 2008, covering nearly all of Greater London
. - the largest such zone in the world. There will be a phased introduction of the scheme from 4 February 2008 through to January 2012. Different vehicles will be affected over time and increasingly tougher emissions standards will apply. The zone is expected to reduce emissions, so that by 2012 they are 16% lower. Payment of the LEZ charge is in addition to any congestion charge required.
From the late 18th to the early 21st century tolls were generally only applied to major bridges and tunnels, for example the Severn crossing
& Forth Road Bridge
, although tolls were abolished on the latter in 2008.
and Roydon
, and College Road in Dulwich
) together with another five or so private toll-roads.
(originally the Birmingham Northern Relief Road) is designed to relieve the M6 through Birmingham, which is one of the most heavily used roads in the country.
for the compulsory registration
of a motor vehicle which is to be used or kept on public roads.
and vehicle components or spares from outside the EU may be assessed at an additional charge which is then subject to VAT.
purposes. Until 2002 their financial benefit was assessed primarily based on price and mileage driven; this was then modified so that vehicles with lower emissions were assessed at a lower value than those with higher emissions. In addition, the taxable allowance for mileage using private cars has remained static.
A significant proportion of new vehicles are bought as company cars, thus this method of charging is not only aimed at encouraging companies to use "cleaner" vehicles, but, when sold on the second-hand market, these vehicles will filter through and raise the efficiency of the national 'fleet' .
rate is to be introduced - dubbed a showroom tax. This new tax was announced in the 2008 budget
, and the level of tax payable will be based on the vehicle excise duty band, ranging from £0 for vehicles in the lower bands, up to £950 for vehicles in the highest band.
and another covering the city centre
.
in 2005 by 74% of the votes cast.
On 2008-03-05, councils from the West Midlands
, including those from Birmingham
and Coventry
, rejected the idea of imposing road pricing schemes on the area.
scheme. This was designed to be revenue neutral with other motoring taxes to be reduced to compensate. The plans have been extremely controversial with 1.8 million people signing a petition against them.
.
Motoring
Motoring may refer to:* 310 Motoring, an automotive customization garage based in Los Angeles, California* AA Motoring Trust* Best Motoring International, Japanese automobile magazine* Driving* Motoring...
taxation in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
comes in a variety of forms. There are fuel taxes, motor vehicle
Motor vehicle
A motor vehicle or road vehicle is a self-propelled wheeled vehicle that does not operate on rails, such as trains or trolleys. The vehicle propulsion is provided by an engine or motor, usually by an internal combustion engine, or an electric motor, or some combination of the two, such as hybrid...
ownership and use taxes and also a few localised tolls and road pricing schemes in operation.
There are proposals for a nationwide road tolling system.
Background
Tax revenues in the UK are not normally hypothectatedHypothecation
Hypothecation is the practice where a borrower pledges collateral to secure a debt. The borrower retains ownership of the collateral, but it is "hypothetically" controlled by the creditor in that he has the right to seize possession if the borrower defaults...
, and this is also the case with most motoring taxes. The exception is revenue raised from congestion charges and from parking charges, which is generally reserved to fund local transportation systems, which may include some aspects of the road
Road
A road is a thoroughfare, route, or way on land between two places, which typically has been paved or otherwise improved to allow travel by some conveyance, including a horse, cart, or motor vehicle. Roads consist of one, or sometimes two, roadways each with one or more lanes and also any...
system.
The two major taxes applied to motorists today in the UK are both excise duties: hydrocarbon oil duty
Hydrocarbon oil duty
Hydrocarbon oil duty is fuel tax levied on some fuels used by road vehicles in the United Kingdom. Between 1993 and 1999 the Government's Fuel Price Escalator led to significant rises in the cost of fuel which led to fuel tax protests in 2000, 2005 and 2007. In May 2008, UK fuel tax rates were one...
or fuel duty as it is more commonly known, and vehicle excise duty
Vehicle excise duty
Vehicle Excise Duty is a vehicle road use tax levied as an excise duty which must be paid for most types of vehicle which are to be used on the public roads in the United Kingdom...
.
History
In the early years of the Twentieth Century funding for roads and related infrastructure was drawn mainly from local ratepayers and the tram companies (who were obliged to maintain the road around their tracks under the Tramways Act of 1870Tramways Act 1870
The Tramways Act 1870 was an important step in the development of urban transport in Britain. Street tramways had originated in the United States, and were introduced to Britain by George Francis Train in the 1860s, the first recorded installation being a short line from Woodside Ferry to...
). The price of fuel for steam engines had been subject to local coal duties
Coal tax post
Coal-tax posts were marker posts, about 250 in number, first erected in 1851 and forming a rough circle about twenty miles from the centre of London, England, to mark the points where taxes on coal and wine due to the Corporation of London had to be paid....
until their abolition in 1889, and centrally controlled during World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
and World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
.
The 1903 motor-car act introduced the £1 registration fee for each motor vehicle, which were already also subject to carriage duty if they were not used solely for trade. Carriage duty was paid for a carriage licence which cost £
£sd
£sd was the popular name for the pre-decimal currencies used in the Kingdom of England, later the United Kingdom, and ultimately in much of the British Empire...
2 2s. (£2.10) for vehicles weighing up to 1 ton, and £4 4s. (£4.20) for vehicles over 1 ton.
A new duty was introduced in 1909 on "motor spirit" (imported petrol), leaving alternative fuels duty-free. The original 1909 rate was 3d
£sd
£sd was the popular name for the pre-decimal currencies used in the Kingdom of England, later the United Kingdom, and ultimately in much of the British Empire...
per imperial gallon.
The Road Fund Licence (later renamed as Vehicle Excise Duty) was introduced in 1921 as way to collect money for a Road Fund, in order to maintain and improve roads which had suffered as a consequence of the Great War. It was intended as charge that could be levied regardless of the fuel used to power a vehicle. The Minister of Transport was responsible for collecting and spending the money collected although in later years the Treasury assumed responsibility for the allocation of funds.
Increased transportation of freight by heavy road vehicles also increased the wear on roads and led first to a "wetted tax" for steam road locomotives, followed by the adoption of the recommendations of the Salter Report
Salter Report
The Salter Report was named after Arthur Salter, who chaired an influential conference of road and rail experts in 1932. The report directed British government policy for transport funding for decades to follow.- Railways :...
of 1933 for all heavy vehicles. This addressed a perception that the free use of roads was unfairly subsidising the railway's competitors, through the introduction of an additional axle weight duty within the VED in order to charge commercial motor vehicles for the costs they generated. There were exceptions for vehicles that seldom used public roads, such as agricultural tractors. This annual duty was payable by all road hauliers in proportion to the axle load and had the effect of removing many heavy steam-powered vehicles from the road. It was accompanied by changes in legislation that relieved local authorities of some of their costs through new abilities to set weight and speed limits.
The revenues from the new centralised funding mechanisms later allowed the government to consider a national network of roads under the Trunk Roads Act of 1936.
In March 1962, motoring organisations appealed to the Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...
to reduce the "disturbingly high cost of motoring" by cutting motoring taxation in the forthcoming budget. Motoring tax revenue had risen from £131 million in 1950 to £730 million in 1961-62.
By February 1966 annual motoring taxation revenue had reached £1 billion, and the Royal Automobile Club
Royal Automobile Club
The Royal Automobile Club is a private club and is not to be confused with RAC plc, a motorists' organisation, which it formerly owned.It has two club houses, one in London at 89-91 Pall Mall, and the other in the countryside at Woodcote Park, Surrey, next to the City of London Freemen's School...
were calling for an end to the "crippling spiral of motoring taxation", stating that less than one-third of the revenue was spent on road improvements.
The measurement and coverage of duties have expanded over time to encompass most types of powered vehicle and different types of fuel. This arrangement of duties, under various names, formed the basis of the UK's road taxation policy for most of the century. The policy had general acceptance until the fuel protests of 2000 halted the practice of increasing duty at a rate above inflation
Fuel Price Escalator
The Fuel Price Escalator was the practice of automatically increasing hydrocarbon oil duty in the United Kingdom ahead of inflation. The escalator was introduced as a measure to stem the increase in pollution from road transport and cut the need for new road building which was then a politically...
. In spite of these protests, the country's economy and motorists' behaviour has generally become less sensitive to the price of fuel at the pump, with economists now estimating it to have a price elasticity of approximately -0.24, (thus an economist would expect that a doubling of the fuel price would only stop a quarter of journeys.)
The significance of other types of charging as a policy instrument has become more important over time. Using fuel duty as the primary instrument of road policy was not challenged until the Smeed Report
Smeed Report
The Smeed Report was a study into alternative methods of charging for road use, commissioned by the UK government between 1962 and 1964. The report stopped short of an unqualified recommendation for road pricing but concluded that it could work and should be considered for congested road...
of 1962 suggested the use of congestion charging mechanisms, which were not introduced until decades later.
Since 2002 policy cues have been given using the income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
system to encourage the purchase of company cars with low emissions.
Fuel duty
Fuel duty (hydrocarbon oil duty) is an excise duty added to the price of motor fuel per unit of volume, rather than as a percentage of the selling price. Value added taxValue added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
is applied in addition as a percentage of the combined total. There is a fuel duty rebate available for bus operators
Bus transport in the United Kingdom
Buses play a major role in the public transport of the United Kingdom, as well as seeing extensive private use.- The horse bus era :The first omnibus service in the United Kingdom was started by John Greenwood between Pendleton and Manchester in 1824. Stagecoach services, sometimes over short...
.
In May 2008, UK fuel taxes were the highest in Europe.
The government revenue from fuel duties was £25.894 billion in 2009, with a further £3.884 billion being raised from the VAT on the duty.
Vehicle excise duty
Vehicle excise duty is also an excise duty. Nearly all motorised vehicles in the United Kingdom are required to have a vehicle licenceVehicle licence
A valid vehicle licence is required by law in some countries to be displayed on any registered motor vehicle if it is to be used or kept on a public road.-Worldwide:...
, which is more commonly known as a tax disc, on display. In most cases, the payment of an annual vehicle excise duty (also known as road tax, car tax or road fund licence) is required to obtain the tax disc, although for some classes of vehicle there is no fee. The tax disc must be prominently displayed on the vehicle, however enforcement is now most often achieved via ANPR referencing a central computerised database, rather than through visual checking.
Since 1999, the duty has been levied according to the CO2
Carbon dioxide
Carbon dioxide is a naturally occurring chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom...
emissions, starting with a reduced rate of £50, the scheme was extended into a graded system in 2001, with the rates being changed in 2006.
The government revenue from vehicle excise duties was £5.63 billion in 2009.
Durham
The UK's first congestion charge was introduced in Durham in 2002. Receipts from the scheme for financial year 2006-07 were £67,000.London
Central London
Central London is the innermost part of London, England. There is no official or commonly accepted definition of its area, but its characteristics are understood to include a high density built environment, high land values, an elevated daytime population and a concentration of regionally,...
have been required to pay a daily charge under the London congestion charge
London congestion charge
The London congestion charge is a fee charged for some categories of motor vehicle to travel at certain times within the Congestion Charge Zone , a traffic area in London. The charge aims to reduce congestion, and raise investment funds for London's transport system...
. Having won the first mayoral election in 2000, Ken Livingstone
Ken Livingstone
Kenneth Robert "Ken" Livingstone is an English politician who is currently a member of the centrist to centre-left Labour Party...
opted to exercise available powers to introduce congestion charging in London, and charging commenced on 17 February 2003. An extension of the zone into West London came into effect on 19 February 2007. Since 4 July 2005 the normal daily charge has been £8. The total receipts from the London Congestion Charge for 2006-07 was £213 million (provisional figures), which, after operating costs, left £123m of hypothecated revenue for London transport schemes.
It has been postulated that, if the capital costs to set up the scheme were accounted for up front, a total of £10m revenue has been raised for Transport in London over five years of operation.
Dartford crossing
In 2003 the Dartford CrossingDartford Crossing
The Dartford - Thurrock River Crossing, Dartford River Crossing is a major road crossing of the River Thames in England, connecting Dartford in the south to Thurrock in the north, via two road tunnels and the Queen Elizabeth II Bridge. It opened in stages, the west tunnel in 1963, the east tunnel...
construction debt was paid off, which should have resulted in the scrapping of the toll fee to cross. However, the government decided to continue to charge most crossing users to keep congestion levels down. Ironically, since the upgrading of the crossing doubled capacity in terms of road lanes, but did not add extra toll booths, it is the toll booths themselves that are responsible for lengthy queues at peak times, and removal of the booths would almost certainly reduce congestion. As with congestion charging schemes, all proceeds must be used for transport purposes. In one year this money amounted to £60 million.
London low emission zone
Towards the end of 2006, the Mayor of LondonMayor of London
The Mayor of London is an elected politician who, along with the London Assembly of 25 members, is accountable for the strategic government of Greater London. Conservative Boris Johnson has held the position since 4 May 2008...
proposed the introduction of a variable congestion charge
London congestion charge
The London congestion charge is a fee charged for some categories of motor vehicle to travel at certain times within the Congestion Charge Zone , a traffic area in London. The charge aims to reduce congestion, and raise investment funds for London's transport system...
. Similarly to vehicle excise duty
Vehicle excise duty
Vehicle Excise Duty is a vehicle road use tax levied as an excise duty which must be paid for most types of vehicle which are to be used on the public roads in the United Kingdom...
(VED), it would be based on emissions of carbon dioxide in grams/km. This would reduce or eliminate the charge for small and fuel-efficient vehicles, and increase it to up to £25 a day for large, inefficient vehicles such as SUVs, large saloons and compact MPV
Compact MPV
A compact MPV is a car classification used in Europe to describe multi-purpose vehicle versions of small family cars , fitting between the mini MPV and large MPV sub-segments...
s with a Band G VED rating, that is, emissions of > 225 g/km of CO2. Electric zero-emissions vehicles are already exempt from the charge. Transport for London
Transport for London
Transport for London is the local government body responsible for most aspects of the transport system in Greater London in England. Its role is to implement the transport strategy and to manage transport services across London...
introduced a low emission zone
Low Emission Zone
A Low-Emission Zone is a geographically defined area which seeks to restrict or deter access by specific polluting vehicles or only allow low emitting vehicles, such as regular or plug-in hybrids, or zero-emission vehicles, such as all-electric vehicles, with the aim of improving the air...
throughout nearly all of Greater London
Greater London
Greater London is the top-level administrative division of England covering London. It was created in 1965 and spans the City of London, including Middle Temple and Inner Temple, and the 32 London boroughs. This territory is coterminate with the London Government Office Region and the London...
on 4 February 2008, covering nearly all of Greater London
Greater London
Greater London is the top-level administrative division of England covering London. It was created in 1965 and spans the City of London, including Middle Temple and Inner Temple, and the 32 London boroughs. This territory is coterminate with the London Government Office Region and the London...
. - the largest such zone in the world. There will be a phased introduction of the scheme from 4 February 2008 through to January 2012. Different vehicles will be affected over time and increasingly tougher emissions standards will apply. The zone is expected to reduce emissions, so that by 2012 they are 16% lower. Payment of the LEZ charge is in addition to any congestion charge required.
Road pricing
From the late 18th to the early 21st century tolls were generally only applied to major bridges and tunnels, for example the Severn crossing
Severn crossing
Severn crossing is a term used to refer to the two motorway crossings over the River Severn estuary between England and Wales. The two crossings are:*The Severn Bridge *The Second Severn Crossing...
& Forth Road Bridge
Forth Road Bridge
The Forth Road Bridge is a suspension bridge in east central Scotland. The bridge, opened in 1964, spans the Firth of Forth, connecting the capital city Edinburgh, at South Queensferry, to Fife, at North Queensferry...
, although tolls were abolished on the latter in 2008.
Toll public roads
There are only two public toll roads (Rye Road between HoddesdonHoddesdon
Hoddesdon is a town in the English county of Hertfordshire, situated in the Lea Valley. The town grew up as a coaching stop on the route between Cambridge and London. It is located southeast of Hertford, north of Waltham Cross and southwest of Bishop's Stortford. At its height during the 18th...
and Roydon
Roydon, Essex
Roydon is a small village located in the Epping Forest district of the County of Essex, England. It is located 1.5 miles west of Harlow, 3.5 miles east of Hoddesdon and 4.6 miles north-west of Epping....
, and College Road in Dulwich
Dulwich
Dulwich is an area of South London, England. The settlement is mostly in the London Borough of Southwark with parts in the London Borough of Lambeth...
) together with another five or so private toll-roads.
Toll motorways
The UK's first privately operated motorway opened in 2003. The M6 TollM6 Toll
The M6 Toll , connects M6 Junction 4 at the NEC to M6 Junction 11A at Wolverhampton with of six-lane motorway. The weekday cash cost is £5.30 for a car and £10.60 for a HGV...
(originally the Birmingham Northern Relief Road) is designed to relieve the M6 through Birmingham, which is one of the most heavily used roads in the country.
Vehicle first registration fee
The one-time fee charged by the Driver and Vehicle Licensing AgencyDriver and Vehicle Licensing Agency
The Driver and Vehicle Licensing Agency is the organisation of the UK Government responsible for maintaining a database of drivers and a database of vehicles in Great Britain; its counterpart in Northern Ireland is the Driver & Vehicle Agency...
for the compulsory registration
Vehicle register
The Vehicle register in the United Kingdom is a database of motor vehicles. It is a legal requirement in the UK for most types of motor vehicle to be registered if they are to be used on the public road....
of a motor vehicle which is to be used or kept on public roads.
Duties on personal imports
Customs duties on some Grey import vehiclesGrey import vehicles
Grey import vehicles are new or used motor vehicles and motorcycles legally imported from another country through channels other than the maker's official distribution system...
and vehicle components or spares from outside the EU may be assessed at an additional charge which is then subject to VAT.
Income tax on private and company vehicles
The value of a vehicle bought by a company for the dedicated use of its staff is treated as a taxable benefit for that individual, and assessed by HMRC with other income for income taxIncome tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
purposes. Until 2002 their financial benefit was assessed primarily based on price and mileage driven; this was then modified so that vehicles with lower emissions were assessed at a lower value than those with higher emissions. In addition, the taxable allowance for mileage using private cars has remained static.
A significant proportion of new vehicles are bought as company cars, thus this method of charging is not only aimed at encouraging companies to use "cleaner" vehicles, but, when sold on the second-hand market, these vehicles will filter through and raise the efficiency of the national 'fleet' .
First year vehicle excise duty
From 2010 a new first year vehicle excise dutyVehicle excise duty
Vehicle Excise Duty is a vehicle road use tax levied as an excise duty which must be paid for most types of vehicle which are to be used on the public roads in the United Kingdom...
rate is to be introduced - dubbed a showroom tax. This new tax was announced in the 2008 budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
, and the level of tax payable will be based on the vehicle excise duty band, ranging from £0 for vehicles in the lower bands, up to £950 for vehicles in the highest band.
Manchester
There is currently a proposal for a Manchester congestion charge. Unlike the current version of the London charge, two cordons will be used, one covering the main area of ManchesterManchester
Manchester is a city and metropolitan borough in Greater Manchester, England. According to the Office for National Statistics, the 2010 mid-year population estimate for Manchester was 498,800. Manchester lies within one of the UK's largest metropolitan areas, the metropolitan county of Greater...
and another covering the city centre
Manchester City Centre
Manchester city centre is the central business district of Manchester, England. It lies within the Manchester Inner Ring Road, next to the River Irwell...
.
Rejected proposals
Proposals for an Edinburgh congestion charge of a £2 charge for crossing either outer cordon or inner cordon (or both) were rejected following a public referendumReferendum
A referendum is a direct vote in which an entire electorate is asked to either accept or reject a particular proposal. This may result in the adoption of a new constitution, a constitutional amendment, a law, the recall of an elected official or simply a specific government policy. It is a form of...
in 2005 by 74% of the votes cast.
On 2008-03-05, councils from the West Midlands
West Midlands (county)
The West Midlands is a metropolitan county in western central England with a 2009 estimated population of 2,638,700. It came into existence as a metropolitan county in 1974 after the passage of the Local Government Act 1972, formed from parts of Staffordshire, Worcestershire and Warwickshire. The...
, including those from Birmingham
Birmingham
Birmingham is a city and metropolitan borough in the West Midlands of England. It is the most populous British city outside the capital London, with a population of 1,036,900 , and lies at the heart of the West Midlands conurbation, the second most populous urban area in the United Kingdom with a...
and Coventry
Coventry
Coventry is a city and metropolitan borough in the county of West Midlands in England. Coventry is the 9th largest city in England and the 11th largest in the United Kingdom. It is also the second largest city in the English Midlands, after Birmingham, with a population of 300,848, although...
, rejected the idea of imposing road pricing schemes on the area.
Road pricing
In 2005, the Government published proposals for a UK wide road pricingRoad pricing
Road pricing is an economic concept regarding the various direct charges applied for the use of roads. The road charges includes fuel taxes, licence fees, parking taxes, tolls, and congestion charges, including those which may vary by time of day, by the specific road, or by the specific vehicle...
scheme. This was designed to be revenue neutral with other motoring taxes to be reduced to compensate. The plans have been extremely controversial with 1.8 million people signing a petition against them.
Workplace parking tax
Nottingham is proposing to become the first city in the UK to introduce a workplace parking levy. The scheme would result in a £185 per annum levy, rising to £350 by 2014, on each parking space made available to employees at businesses with more than ten such parking spaces. The council propose to use the revenue, which is forecast to be £12 million in the first year, to develop the city's tram systemNottingham Express Transit
Nottingham Express Transit is a light-rail tramway in the Nottingham area in England. The first line opened to the public on 9 March 2004, having cost £200 million to construct. The scheme took sixteen years from conception to implementation...
.
See also
- History of toll roads in the United KingdomHistory of toll roads in the United KingdomFor details about the history of Toll roads in the United Kingdom see the articles about Toll roads in each of the individual countries of the United Kingdom:*Toll roads in Great Britain*Toll roads in Northern Ireland...