Highways England has announced that all Severn Bridge crossings will be exempt from VAT from 8 January 2018.
It comes as the crossing is transferred from private ownership into that of Highways England, the Government-owned company responsible for the management of motorways and trunk roads across England.
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The scrapping of the VAT will be the first step towards abolishing tolls on the crossing entirely, says the firm.
Highways England’s divisional director of strategy and planning, Clive Perkin, said: “We want to remind drivers that when Highways England takes over management of the bridges, prices will be reduced as they will no longer be subject to VAT.
“This is good news for private vehicle drivers as this is the first step in the Government’s commitment to abolishing the bridge tolls by the end of 2018. Today we are setting out how people can prepay for their crossings when the change takes place.”
Car drivers currently pay £6.70 to cross the bridge from England to Wales – with this set to drop to £5.60.
Motorists crossing the bridge from Wales to England don’t pay any toll, leading to some previously describing it as a ‘tax on Wales’. Around 25 million journeys are made across the two Severn crossings every year, with a study commissioned by the Welsh Government suggesting scrapping the tolls would boost the Welsh economy by £100 million.
“Our decision to abolish the Severn tolls sends a powerful message to businesses, commuters and tourists that the UK Government is committed to strengthening the Welsh economy,” said the secretary of state for Wales, Alun Cairns.
“By strengthening the links between communities in south Wales and south-west England, we will transform the joint economic prospects of both regions, creating a growth corridor stretching from Cardiff through Newport to Bristol.
“I want to ensure that visitors and investors know what Wales has to offer and I want the world to know our nation is open for business.”
All staff currently employed by Severn Crossing PLC, the private consortium that’s selling the bridge, have been offered jobs with Highways England.
After 8 January the crossings will operate as normal with just a few small changes to signs at the toll plazas. Regular users paying by direct debit won’t have to do anything – their payments will be automatically adjusted to take the new fees into account.