As a result of a technicality under new EU regulations, new motorhomes with a WLTP Euro 6D/2 are no longer subject to a commercial vehicle tax band in the UK. Instead, they are, for the purposes of Vehicle Excise Duty (VED), now taxed as a car.
To classify motorhomes as cars for taxation purposes is clearly wrong and will have a devastating effect on the motorhome industry.
Motorhomes are a manufacturing success story in the UK and sales have been holding up reasonably well in recent years - more than 14,500 new registrations were recorded in 2018. However, like many other UK industries at present, the motorhome market continues to face a number of different challenges.
Motorhomes have already been subject to a large price increase for next season’s models, which take into consideration a number of factors, not least the weakening of sterling, Brexit challenges, but also new, cleaner, but more expensive engines. This additional registration increase of nearly £2000 will have a significant impact on UK motorhome manufacturers, their employees and the entire industry.
Government taxing motorhomes as cars will see a substantial fall in production, collapse in demand for new products, and associated job losses throughout the supply chain.
Due to increasing political uncertainty in the UK and the approaching Brexit deadline, motorhome dealers are already facing concerns over consumer confidence.
The application of car registration tax charges to motorhomes means dealerships are likely to experience anti-competitive trade within the market between regional dealerships, with many avoiding making contractual commitments with motorhome manufacturers for those new WLTP motorhomes that attract the additional vehicle registration charge.
The National Caravan Council (NCC) has already produced a series of important guides for its dealer members to help deal with questions from confused customers and answer issues over end of series derogated vehicles (older engines Euro 6b/1). These guides, only available to NCC members, can be accessed via the link below.
Ultimately, motorhomes being classified as cars for taxation purposes means consumers will be forced to foot the bill for this increase in tax.
The initial registration tax for a new motorhome with a WLTP Euro 6D/2 engine has been increased from £265 (PLG rate) up to £2,135 – a 705% increase. Further increases per year for the subsequent five years of ownership after first year registration mean that a motorhome with a WLTP Euro 6D/2 engine will cost £2870 more than it would under the existing VED system for motorhomes.
This draconian rise in motorhome tax makes it difficult for buyers to keep up with the costs of funding their passion to explore the great outdoors with cross-generational family. This will drive a reduction in the number of motorhome holidays taken in the UK, a significant impact upon domestic tourism and a dramatic fall in the sector's current contribution to the UK economy.