Motorhome & Campervan UK Tax Guide – All You Need To Know!

The UK has 247,100 miles of road, just waiting to be explored. Are you ready to get out there?

One of the best ways to travel both the UK and Europe is via your own motorhome or campervan. They become your home, giving you the freedom to travel at your own pace, with all the conveniences that you would find in a home or hotel.

If you’re interested in purchasing a motorhome, you might be thinking about motorhome tax, which recently changed in 2020.

Read on for our ultimate guide to motorhome tax and learn why the new tax laws make now the perfect time to purchase a leisure vehicle.

What Are the Advantages of Owning a Motorhome?

Buying a new or secondhand motorhome can be one of the most exciting ways to see the country and travel at your own pace. It’s a liberating lifestyle that lets you travel wherever you want to go, from the comfort of your own home.

Motorhomes contain kitchens, bathrooms, living and sleeping space, electricity, and storage space, making it easy to travel with everything you need.

There’s also a vibrant caravanning community in the UK, making it a great way to meet new people and increase your circle of friends.

How Can I Save Money on a Motorhome?

There are motorhomes for all budgets, but one of the simplest ways to save money on purchasing is with motorhome finance. With affordable monthly repayments, you can start enjoying your new motorhome right away.

What Is Motorhome Road Tax?

All vehicles in the UK are subject to tax, and motorhomes and campervans are no exception.

Road Tax, also known as Vehicle Excise Duty (VED) is a government tax mandated for the purchase of new motorhomes. The road tax increased as of 1 April 2020, so pay close attention as it may now be different than what you were expecting.

The tax is paid in two different ways. When a vehicle is purchased new, the one-of VED payment is made, which is calculated by the vehicles fuel emissions. After the first year, motorhomes and campervans are subject to a yearly road tax, based on the original purchase price of the vehicle.

If you purchase a secondhand campervan or motorhome, you won’t be subject to the one-off VED, but you will need to pay the annual road tax.

Vehicle tax payments are a reality of owning a leisure vehicle and provide an important revenue source to the country, helping to maintain the open highways and public spaces that we love exploring in our motorhomes.

A Recent U-Turn to Motorhome Tax Classification

In September 2019 a new EU policy determined that all motorhomes and campervans would no longer fall under the commercial vehicle tax band, but instead be reclassified and taxed as a private car for the purposes of vehicle excise duty. This resulted in an eye-watering hike on campervan and motorhome tax of over 700%.

As motorhomes are built with commercial engines and a light commercial chassis, a u-turn by the UK treasury in March 2020 has now seen this reclassification scrapped, with the vehicles now being classed as commercial vehicles once again.

These new changes will save motorhome and campervan owners thousands of pounds per year, a great win for those thinking to purchase a new vehicle soon. The National Caravan Council is also in support of the tax reform and campaigned to make it happen.

As a consumer, the new tax makes 2020 the best year to either take up caravanning or upgrade your current vehicle to a new or larger model.

How Much Will it Cost?

VED

For new motorhome purchasers, the VED cost is calculated based on the vehicle’s CO2 emissions. Zero or low emission vehicles pay the least tax, followed by diesel vehicles that meet the RDE2 standard, along with petrol, followed by diesel vehicles that don’t meet the RDE2 standard.

Alternative fuel vehicles pay the lowest rate of tax. This is in part to encourage drivers to use vehicles that are more environmentally friendly.

RDE2

What is the RDE2 standard? A confusing acronym, but it stands for Real Driving Emissions Standard 2. For a vehicle to meet this standard, it must emit no more than 114 mg/km of nitrogen oxide, NOx, in real-world driving situations, including city and highway driving.

Vehicle manufacturers must put their models to the test before going on the market to determine whether or not they are RDE2 compliant.

If possible, it’s worth trying to purchase an RDE2 compliant vehicle, both for the tax break and for the good of the environment.

As CO2 emissions increase, the tax increases, so check your vehicle before purchasing. It is a wide range, from £0 up to £2,175. Check with the MOT to confirm current rates.

Road Tax

As mentioned, second-hand purchasers won’t need to pay for the VED, but they will need to pay for the motorhome’s annual road tax. This is calculated on the price you purchased the vehicle for, not its original new purchase price.

An easy way to understand this is that the higher the value of the motorhome, the higher the yearly tax will be. However, this principle applies to all cars and vehicles in the UK, so shouldn’t be surprising to most drivers.

What Other Costs are Associated with Ownership?

In addition to motorhome tax and VED, motorhome owners should also budget for a few other annual costs, in addition to the vehicle purchase cost. These costs include servicing and maintenance, repairs, spare parts, insurance, and storage costs if you don’t have space on your property to keep the vehicle.

You’ll also want to account for cooking gas, supplies, and nightly camping or parking fees, when on the road.

Get Started Today

Ready to make your motorhome dreams in reality? Contact us today for professional and friendly advice or with any questions on caravan purchasing, motorhome tax, and financing.

We love the caravan lifestyle as much as you do and look forward to helping you start your voyage in a vehicle that’s perfect for the needs of you and your family. The open road awaits!