diff --git a/Cargo.lock b/Cargo.lock
index eef205be6328..442930fcb97b 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -13641,6 +13641,8 @@ name = "xcm"
 version = "0.9.38"
 dependencies = [
  "derivative",
+ "hex",
+ "hex-literal",
  "impl-trait-for-tuples",
  "log",
  "parity-scale-codec",
diff --git a/xcm/Cargo.toml b/xcm/Cargo.toml
index 3e0fcdb1f093..b56c8109160f 100644
--- a/xcm/Cargo.toml
+++ b/xcm/Cargo.toml
@@ -18,6 +18,8 @@ xcm-procedural = { path = "procedural" }
 
 [dev-dependencies]
 sp-io = { git = "https://github.com/paritytech/substrate", branch = "polkadot-v0.9.38" }
+hex = "0.4.3"
+hex-literal = "0.3.4"
 
 [features]
 default = ["std"]
diff --git a/xcm/src/lib.rs b/xcm/src/lib.rs
index 678a825b6608..70fe1158ca44 100644
--- a/xcm/src/lib.rs
+++ b/xcm/src/lib.rs
@@ -41,6 +41,9 @@ pub mod latest {
 mod double_encoded;
 pub use double_encoded::DoubleEncoded;
 
+#[cfg(test)]
+mod tests;
+
 /// Maximum nesting level for XCM decoding.
 pub const MAX_XCM_DECODE_DEPTH: u32 = 8;
 
@@ -73,6 +76,7 @@ pub trait TryAs<T> {
 
 macro_rules! versioned_type {
 	($(#[$attr:meta])* pub enum $n:ident {
+		$(#[$index3:meta])+
 		V3($v3:ty),
 	}) => {
 		#[derive(Derivative, Encode, Decode, TypeInfo)]
@@ -86,7 +90,7 @@ macro_rules! versioned_type {
 		#[codec(decode_bound())]
 		$(#[$attr])*
 		pub enum $n {
-			#[codec(index = 0)]
+			$(#[$index3])*
 			V3($v3),
 		}
 		impl $n {
@@ -131,7 +135,9 @@ macro_rules! versioned_type {
 	};
 
 	($(#[$attr:meta])* pub enum $n:ident {
+		$(#[$index2:meta])+
 		V2($v2:ty),
+		$(#[$index3:meta])+
 		V3($v3:ty),
 	}) => {
 		#[derive(Derivative, Encode, Decode, TypeInfo)]
@@ -145,9 +151,9 @@ macro_rules! versioned_type {
 		#[codec(decode_bound())]
 		$(#[$attr])*
 		pub enum $n {
-			#[codec(index = 0)]
+			$(#[$index2])*
 			V2($v2),
-			#[codec(index = 1)]
+			$(#[$index3])*
 			V3($v3),
 		}
 		impl $n {
@@ -216,93 +222,12 @@ macro_rules! versioned_type {
 			}
 		}
 	};
-
-	($(#[$attr:meta])* pub enum $n:ident {
-		V2($v2:ty),
-		V3($v3:ty),
-	}) => {
-		#[derive(Derivative, Encode, Decode, TypeInfo)]
-		#[derivative(Clone(bound = ""), Eq(bound = ""), PartialEq(bound = ""), Debug(bound = ""))]
-		#[codec(encode_bound())]
-		#[codec(decode_bound())]
-		$(#[$attr])*
-		pub enum $n {
-			#[codec(index = 1)]
-			V2($v2),
-			#[codec(index = 2)]
-			V3($v3),
-		}
-		impl $n {
-			pub fn try_as<T>(&self) -> Result<&T, ()> where Self: TryAs<T> {
-				<Self as TryAs<T>>::try_as(&self)
-			}
-		}
-		impl TryAs<$v2> for $n {
-			fn try_as(&self) -> Result<&$v2, ()> {
-				match &self {
-					Self::V2(ref x) => Ok(x),
-					_ => Err(()),
-				}
-			}
-		}
-		impl TryAs<$v3> for $n {
-			fn try_as(&self) -> Result<&$v3, ()> {
-				match &self {
-					Self::V3(ref x) => Ok(x),
-					_ => Err(()),
-				}
-			}
-		}
-		impl IntoVersion for $n {
-			fn into_version(self, n: Version) -> Result<Self, ()> {
-				Ok(match n {
-					2 => Self::V2(self.try_into()?),
-					3 => Self::V3(self.try_into()?),
-					_ => return Err(()),
-				})
-			}
-		}
-		impl From<$v2> for $n {
-			fn from(x: $v2) -> Self {
-				$n::V2(x)
-			}
-		}
-		impl<T: Into<$v3>> From<T> for $n {
-			fn from(x: T) -> Self {
-				$n::V3(x.into())
-			}
-		}
-		impl TryFrom<$n> for $v2 {
-			type Error = ();
-			fn try_from(x: $n) -> Result<Self, ()> {
-				use $n::*;
-				match x {
-					V2(x) => Ok(x),
-					V3(x) => x.try_into(),
-				}
-			}
-		}
-		impl TryFrom<$n> for $v3 {
-			type Error = ();
-			fn try_from(x: $n) -> Result<Self, ()> {
-				use $n::*;
-				match x {
-					V2(x) => x.try_into(),
-					V3(x) => Ok(x),
-				}
-			}
-		}
-		impl MaxEncodedLen for $n {
-			fn max_encoded_len() -> usize {
-				<$v3>::max_encoded_len()
-			}
-		}
-	}
 }
 
 versioned_type! {
 	/// A single version's `Response` value, together with its version code.
 	pub enum VersionedAssetId {
+		#[codec(index = 3)]
 		V3(v3::AssetId),
 	}
 }
@@ -310,7 +235,9 @@ versioned_type! {
 versioned_type! {
 	/// A single version's `Response` value, together with its version code.
 	pub enum VersionedResponse {
+		#[codec(index = 2)]
 		V2(v2::Response),
+		#[codec(index = 3)]
 		V3(v3::Response),
 	}
 }
@@ -319,7 +246,9 @@ versioned_type! {
 	/// A single `MultiLocation` value, together with its version code.
 	#[derive(Ord, PartialOrd)]
 	pub enum VersionedMultiLocation {
+		#[codec(index = 1)] // v2 is same as v1 and therefore re-using the v1 index
 		V2(v2::MultiLocation),
+		#[codec(index = 3)]
 		V3(v3::MultiLocation),
 	}
 }
@@ -327,7 +256,9 @@ versioned_type! {
 versioned_type! {
 	/// A single `InteriorMultiLocation` value, together with its version code.
 	pub enum VersionedInteriorMultiLocation {
+		#[codec(index = 2)] // while this is same as v1::Junctions, VersionedInteriorMultiLocation is introduced in v3
 		V2(v2::InteriorMultiLocation),
+		#[codec(index = 3)]
 		V3(v3::InteriorMultiLocation),
 	}
 }
@@ -335,7 +266,9 @@ versioned_type! {
 versioned_type! {
 	/// A single `MultiAsset` value, together with its version code.
 	pub enum VersionedMultiAsset {
+		#[codec(index = 1)] // v2 is same as v1 and therefore re-using the v1 index
 		V2(v2::MultiAsset),
+		#[codec(index = 3)]
 		V3(v3::MultiAsset),
 	}
 }
@@ -343,7 +276,9 @@ versioned_type! {
 versioned_type! {
 	/// A single `MultiAssets` value, together with its version code.
 	pub enum VersionedMultiAssets {
+		#[codec(index = 1)] // v2 is same as v1 and therefore re-using the v1 index
 		V2(v2::MultiAssets),
+		#[codec(index = 3)]
 		V3(v3::MultiAssets),
 	}
 }
diff --git a/xcm/src/tests.rs b/xcm/src/tests.rs
new file mode 100644
index 000000000000..32326cab0333
--- /dev/null
+++ b/xcm/src/tests.rs
@@ -0,0 +1,183 @@
+// Copyright 2021 Parity Technologies (UK) Ltd.
+// This file is part of Polkadot.
+
+// Polkadot is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+
+// Polkadot is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+// GNU General Public License for more details.
+
+// You should have received a copy of the GNU General Public License
+// along with Polkadot. If not, see <http://www.gnu.org/licenses/>.
+
+use crate::*;
+use alloc::vec;
+
+#[test]
+fn encode_decode_versioned_asset_id_v3() {
+	let asset_id = VersionedAssetId::V3(v3::AssetId::Abstract([1; 32]));
+	let encoded = asset_id.encode();
+
+	assert_eq!(
+		encoded,
+		hex_literal::hex!("03010101010101010101010101010101010101010101010101010101010101010101"),
+		"encode format changed"
+	);
+	assert_eq!(encoded[0], 3, "bad version number");
+
+	let decoded = VersionedAssetId::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(asset_id, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_response_v2() {
+	let response = VersionedResponse::V2(v2::Response::Null);
+	let encoded = response.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("0200"), "encode format changed");
+	assert_eq!(encoded[0], 2, "bad version number");
+
+	let decoded = VersionedResponse::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(response, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_response_v3() {
+	let response = VersionedResponse::V3(v3::Response::Null);
+	let encoded = response.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("0300"), "encode format changed");
+	assert_eq!(encoded[0], 3, "bad version number");
+
+	let decoded = VersionedResponse::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(response, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_multi_location_v2() {
+	let location = VersionedMultiLocation::V2(v2::MultiLocation::new(0, v2::Junctions::Here));
+	let encoded = location.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("010000"), "encode format changed");
+	assert_eq!(encoded[0], 1, "bad version number"); // this is introduced in v1
+
+	let decoded = VersionedMultiLocation::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(location, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_multi_location_v3() {
+	let location = VersionedMultiLocation::V3(v3::MultiLocation::new(0, v3::Junctions::Here));
+	let encoded = location.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("030000"), "encode format changed");
+	assert_eq!(encoded[0], 3, "bad version number");
+
+	let decoded = VersionedMultiLocation::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(location, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_interior_multi_location_v2() {
+	let location = VersionedInteriorMultiLocation::V2(v2::InteriorMultiLocation::Here);
+	let encoded = location.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("0200"), "encode format changed");
+	assert_eq!(encoded[0], 2, "bad version number");
+
+	let decoded = VersionedInteriorMultiLocation::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(location, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_interior_multi_location_v3() {
+	let location = VersionedInteriorMultiLocation::V3(v3::InteriorMultiLocation::Here);
+	let encoded = location.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("0300"), "encode format changed");
+	assert_eq!(encoded[0], 3, "bad version number");
+
+	let decoded = VersionedInteriorMultiLocation::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(location, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_multi_asset_v2() {
+	let asset = VersionedMultiAsset::V2(v2::MultiAsset::from(((0, v2::Junctions::Here), 1)));
+	let encoded = asset.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("010000000004"), "encode format changed");
+	assert_eq!(encoded[0], 1, "bad version number");
+
+	let decoded = VersionedMultiAsset::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(asset, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_multi_asset_v3() {
+	let asset = VersionedMultiAsset::V3(v3::MultiAsset::from((v3::MultiLocation::default(), 1)));
+	let encoded = asset.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("030000000004"), "encode format changed");
+	assert_eq!(encoded[0], 3, "bad version number");
+
+	let decoded = VersionedMultiAsset::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(asset, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_multi_assets_v2() {
+	let assets = VersionedMultiAssets::V2(v2::MultiAssets::from(vec![v2::MultiAsset::from((
+		(0, v2::Junctions::Here),
+		1,
+	))]));
+	let encoded = assets.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("01040000000004"), "encode format changed");
+	assert_eq!(encoded[0], 1, "bad version number");
+
+	let decoded = VersionedMultiAssets::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(assets, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_multi_assets_v3() {
+	let assets = VersionedMultiAssets::V3(v3::MultiAssets::from(vec![
+		(v3::MultiAsset::from((v3::MultiLocation::default(), 1))),
+	]));
+	let encoded = assets.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("03040000000004"), "encode format changed");
+	assert_eq!(encoded[0], 3, "bad version number");
+
+	let decoded = VersionedMultiAssets::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(assets, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_xcm_v2() {
+	let xcm = VersionedXcm::V2(v2::Xcm::<()>::new());
+	let encoded = xcm.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("0200"), "encode format changed");
+	assert_eq!(encoded[0], 2, "bad version number");
+
+	let decoded = VersionedXcm::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(xcm, decoded);
+}
+
+#[test]
+fn encode_decode_versioned_xcm_v3() {
+	let xcm = VersionedXcm::V3(v3::Xcm::<()>::new());
+	let encoded = xcm.encode();
+
+	assert_eq!(encoded, hex_literal::hex!("0300"), "encode format changed");
+	assert_eq!(encoded[0], 3, "bad version number");
+
+	let decoded = VersionedXcm::decode(&mut &encoded[..]).unwrap();
+	assert_eq!(xcm, decoded);
+}