A landmark Tayside company has warned plans that could see tax on motorhomes rise by an incredible 705% could have a “devastating” impact on its business.
Errol-based Perthshire Caravans is urging the UK government to drop plans to tax motorhomes as cars, rather than as private/light good vehicles, as they currently are.
Motorhomes are built using a light commercial chassis, with a commercial engine, as its base.
Manufacturers then convert these vehicles into motorhomes.
Because of this, the vehicles are currently taxed as private light or heavy good vehicles.
However, motorhomes have a unique code for vehicle classification and under plans that would be introduced under the Finance Bill this autumn, they will start being taxed as cars rather than commercial vehicles for Vehicle Excise Duty (VED).
This will mean the VED will increased from £265 to £2,315 while tax costs will also be higher for the first five years of the vehicle’s life.
Company director Claire McCormack has now written to SNP Perth and North Perthshire MP Pete Wishart asking him to table an amendment to the Finance Bill in order to avert the tax hike.
Ms McCormack wrote: “There can be no doubt the government decision to tax motorhomes as cars will see a substantial fall in production, collapse in demand for new product, and likely job losses in your constituency and beyond.
“To classify motorhomes as cars for taxation purposes is clearly wrong and I fear if this happens it will have a devastating impact on my business and the British motorhome manufacturing industry overall.”
Ms McCormack added the plan would deter people from buying newer, more environmentally-friendly motorhomes when older, more polluting vehicles, will not be subjected to the new charges.
She said: “It is nonsensical for newer motorhomes with cleaner engines to be subjected to this registration tax hike when current models, with less energy efficient engines, can continue to be registered at the current rate.”
Ms McCormack said the move will lead to a drop in orders for new motorhomes and increase demanded for “nearly new” pre-owned vehicles.
Mr Wishart pledged to raise the issue with the Chancellor.
“Perthshire Caravans is an established and valued local business,” he said.
“I am concerned that new rules may possibly impact this important business. I will be discussing this matter further with Perthshire Caravans early next week and intend to raise it directly with the Chancellor of the Exchequer.“
A Treasury spokesperson said: “To incentivise drivers to make the greenest choices, a new, robust CO2 emissions test procedure is being introduced.
“Motorhomes will move into a different VED category as a result, but we recognise the concerns of the sector, and keep all taxes under review.”