Government launches consultation on new road tax regime for vans

The Government wants vehicle excise duty (VED) for vans to be graduated according to their emissions in the same way it is for cars.

Currently, VED for vans remains at a flat rate of £250 no matter what the type of vehicle. The consultation, launched by the Treasury today, will look at changing this duty to encourage drivers to choose cleaner vans when purchasing a new van.

It will explore creating a graduated first year road tax rate for vans, as is already in place for cars. Most van purchases would pay less tax in the first year as a result of the change, says the Treasury

Around 75% of vans purchased in 2016-2017 emitted over 150g/km of CO2, while less than one in every 200 vans purchased that same year were ultra-low emission vehicles.

Environment secretary Michael Gove said: “Businesses have a crucial role in this. That’s why today we are setting out plans to make low emission vans more affordable and asking businesses how we can help them break down the barriers to the use of lower emission machinery.”

A separate call for evidence is looking at whether the reduced duty rate for red diesel is holding back the use of cleaner fuels by non-road vehicles and machinery in towns and cities – for example cranes or generators used on construction sites.

Red diesel, which accounts for 15% of all diesel consumption in the UK, currently benefits from a reduced rate of 11.14p per litre compared to the standard charge of 57.95p. The call for evidence excludes red diesel used for agricultural purposes and for fishing vessels.

Exchequer secretary to the Treasury, Robert Jenrick, said: “We want to be the first government to leave the environment in a better state that we found it. One of the ways we can do this is by using the tax system to help drivers afford greener choices.

“We want to help ‘white van man’ go green. We appreciate that buying a new van is a major investment for small businessmen and women and want to help make environmentally friendly choices more affordable.

“Public health is at risk due to the use of red diesel in towns and cities. So we are looking at how we can level the playing field on red diesel and exploring how we can encourage users to ditch it.”

The consultation on reforming van VED to incentivise van operators to make the cleanest choices when purchasing a new van closes on July 20.

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