Campervan and Motorhome Tax Changes 2020: UK Government Budget

uk Campervan and Motorhome Tax in 2020

A lot of motorhome and campervan owners have recently been celebrating the latest news surrounding the new government laws on tax. The latest string of updates included in the UK’s most recent budget have had a big impact on road vehicles, reducing the overall cost of running a campervan or motorhome.

Previously, the government had been making decisions that had the opposite effect and made running a camper more expensive. However, this new announcement appears to be a complete u-turn on their original stance.

How does the Spring 2020 Budget affect campervan owners?

There’s plenty for campervan buyers and owners to celebrate in Rishi Sunak’s first budget as the new Chancellor of the Exchequer. Here are the highlights at a glance, as they affect us as campervanners.

2020 UK Road Tax Highlights:

• Road tax hike revoked!
• The VED (Vehicle Excise Duty, or road tax) payable for new campervans and motorhomes first registered after 1 September 2019 had increased from £265 per year to £2,135 in the first year, and then £465 for each of the subsequent five years. It has now gone back down to normal.
• New campervan buyers will now pay £265 VED for the first registration, rising to £270 from 1 April 2020. This is the same road tax as vans, rather than luxury supercars.
• Fuel duty to be frozen for the 10th consecutive year.
• This shows the government’s continuing confidence in petrol and diesel for the medium term.
• Electric vehicles will come in time, but won’t replace fossil fuels for quite a while yet, especially as pertains to vans and commercial vehicles.
• More than £600bn is set to be spent on roads, rail, broadband and housing by the middle of 2025.
• New and significant investment in the transport network.
• There will be £27bn for motorways and other arterial roads, including a new tunnel for the A303 near Stonehenge - making it easier for everyone to head to the West Country at any time of the year.
• £2.5bn will be available to fix potholes and resurface roads in England over five years… smooth at last?
• The Bank of England has reduced the interest base rate from 0.75% to 0.25%.
• Now it makes it an even better option to invest your hard-earned savings in a campervan you can enjoy, rather than leaving it in an account that earns little interest.
• Cost of hire purchase agreements for buying a campervan monthly drops to a new low level, improving affordability.

Campervans are No-Longer Taxed as Luxury Vehicles

The Government seems to have listened to the campervan and motorhome industry’s views and cancelled the 705% rise in vehicle tax rise that it imposed from September 2019. The road tax of £2,135 in the first year was levied on all high-value new vehicles, and seems to have been taking aim at people buying new luxury cars.

Unfortunately, it also punished buyers of new, low-emission campervans and motorhomes. As a result, sales of new leisure vehicles, including campers, fell drastically, and Britain’s largest motorhome manufacturer, Swift, closed one of its factories. The National Caravan Council, which represents campervan and motorhome manufacturers, lobbied for a fairer tax that would protect jobs in the leisure vehicle sector. I also lobbied several members of the House of Lords, as well as my MP, hoping that they would help to get this VED hike reversed.

NCC Director General, John Lally, said: “We have had extraordinary support from Parliamentarians – too many to mention them all - but in particular Richard Holden MP, Sir David Amess MP, Emma Hardy MP, Karl Turner MP and David Davis MP. Rishi Sunak MP – prior to becoming Chancellor - had also indicated Support.”

“Alongside the NCC, its members and the wider industry, these MPs worked tirelessly to reverse this increase, knowing the impact it would have on British manufacturing, on jobs and, potentially, on UK tourism. We offer our thanks to all of them and to the media, who highlighted how unfair the tax was.”

Why Are Campervan Owners Good for Britain?

Campervan and motorhome owners typically spend more time - and money - touring the UK than going abroad. On top of that, there are many jobs which had been put at risk by the VED tax hike. As John Lally points out, “Leisure vehicle manufacturing is a British success story. The steady growth the motorhome industry had seen up to the time of the tax hike was almost instantly halted. We are delighted that our new Chancellor has so quickly understood that motorhomes and campervans should return to being taxed as vans, which is logical as the vast majority are based on a commercial vehicle chassis. This is an amazing result for us, for this vibrant manufacturing industry and for the many thousands who take motorhoming holidays – the vast majority in the UK – each year.”

Victory is sweet - and the return to a fair road tax (VED) will benefit anyone buying a small campervan in 2020 and beyond.

Campervan and Motorhome Fuel Duty Frozen

The continuing fuel duty freeze is also a welcome decision. Motorists pay plenty of tax, and help support other vital government spending - but enough’s enough… By freezing fuel duty, the Government seems to have accepted that most people will be unable to switch to an expensive new electric vehicle straight away. The time will arrive, but when it comes to vans - and lorries particularly - the nation can’t go all-electric on the roads just yet.

Turn Savings into ‘Me-Time’

Low interest rates are good news for borrowers and for business, but not so good for savers hoping that an annual boost from a high interest rate will make their savings grow. With interest rates so low, it’s probably not worth leaving too much money in an account doing nothing. Life is for living - and many people are realising they could even buy a campervan and enjoy it now.

Better Roads

Winter storms have left our roads in a shocking state, and county councils have not had sufficient budgets to fix all the potholes and road surfaces until now. In the budget, £600bn is earmarked for improvements to such infrastructure projects as roads, fast broadband, rail and housing throughout the UK.

£2.5bn should be available to fix potholes and resurface roads in England over the next five years.

Every school holiday, the AA and RAC warn news channels about traffic jams heading to the West Country, as millions try to go on holiday all at once. One of the worst traffic jams seems to be on the A303, especially where the road narrows near Stonehenge. So if some of the £27bn worth of improvements to motorways and other main roads is spent on the A303 tunnel near Stonehenge - plenty of us will be delighted!