New van road tax system on the cards

Government wants “white van man to go green” and choose an ultra-low emission vehicles, potentially ending flat £250 road van tax rate

A new van road tax system could soon be introduced, after the Treasury announced it is investigating how to incentivise van drivers into buying ultra-low emission vehicles (ULEVs).

Current road tax rules see van drivers pay a flat rate of £250 every year, providing no incentive for drivers to choose cleaner vehicles – with the net result that only 0.4 per cent of vans on the road are classified as a ULEVs, emitting 75g/km or less of carbon dioxide.

VED road tax: all you need to know

Announcing the consultation, the Exchequer Secretary to the Treasury, Robert Jenrick, said the Government wants “to help ‘white van man’ go green.”

Back when the Chancellor of the Exchequer Philip Hammond delivered his Budget in November 2017, he announced a £220 million clean air fund, paid for by diesel cars moving up a band for their first-year road tax rate. However, Hammond was clear that “no white van man or woman will be hit by these measures.”

Therefore, the Government has a tricky job on its hands in encouraging van drivers into cleaner vehicles without penalising them unfairly. Announcing this new consultation, Robert Jenrick said the Treasury was aware that “buying a new van is a major investment for small businessmen and women”, and it intends to “make environmentally friendly choices more affordable.”

While details of likely changes will be ironed out during the consultation, the Government already has a model it could use to encourage drivers into less polluting vans: the previous road tax system for cars, scrapped in April 2017, was CO2 based, and saw drivers of ULEVs pay no road tax at all.

Any new road tax system for vans will apply to light goods vehicles weighing less than 3,500kg. The Treasury said it will “explore creating a graduated first year rate for vans, as is already in place for cars”, adding that “most van purchases would pay less tax in the first year as a result of the change”. However, no mention was made of whether van drivers would be better or worse off after the first-year road tax bill is paid.

Best low emissions green cars 2018

Another item under consideration following a separate call for evidence from the Treasury is the use of red diesel. Intended for use by vehicles not driven on the road – like farm, construction and forestry vehicles - red diesel is taxed at 11.4p per litre, far lower than the 57.95p per litre duty levied on normal diesel.

While the use of red diesel by vehicles driven on the road is illegal, unscrupulous drivers are known to use it in this environment, with a previous study finding up to one in five drivers on the road had red diesel in their tanks.

Jenrick said “public health is at risk due to the use of red diesel in towns and cities”, and the Treasury would be looking at how it could “level the playing field on red diesel and exploring how we can encourage users to ditch it.” Red diesel used by agricultural vehicles, fishing boats, home heating and static generators will be “out of scope” for the call to evidence, however.

Read our guide to the 2018 tax bands

Recommended

Best small vans to buy 2021
Best small vans
Vans

Best small vans to buy 2021

Small vans are affordable, practical and cheap to run, and this is our top 10 rundown of low-cost load-luggers
15 Jan 2021
Van valuations: how much is my van worth?
Ford Transit Custom Sport
Tips & advice

Van valuations: how much is my van worth?

If you're buying or selling a van, you'll want to know how much it's worth. So what’s the best way to find the true value of a used commercial vehicle…
30 Dec 2020
ULEZ compliant vans: rules and charges explained
Vans

ULEZ compliant vans: rules and charges explained

If your van doesn’t meet certain criteria, you’ll need to pay to enter London’s Ultra Low Emission Zone. We explain the ULEZ rules and fees...
17 Dec 2020
Iveco Daily review
IVECO Daily - front tracking
Iveco Daily

Iveco Daily review

The Iveco Daily has been updated with new technology and greater driver comfort, but lacks the finesse of some rivals
10 Dec 2020

Most Popular

New 2021 Mercedes EQA electric crossover arrives with 302-mile range
Mercedes EQA - front
Mercedes EQA

New 2021 Mercedes EQA electric crossover arrives with 302-mile range

The new Mercedes EQA is a premium rival for the Volkswagen ID.3 and Kia e-Niro, with a maximum claimed range of 302 miles
20 Jan 2021
BMW, Mercedes and Tesla owners could be at risk of higher insurance premiums
bmw x5 m50d tracking front
News

BMW, Mercedes and Tesla owners could be at risk of higher insurance premiums

Raw, uncapped insurance group rating data could be used by insurers to increase premiums on various high-end cars
19 Jan 2021
New Skoda Fabia spied in production panelling for first time
Skoda Fabia spy
Skoda Fabia

New Skoda Fabia spied in production panelling for first time

Latest Skoda Fabia supermini is due to arrive later this year – and our spy photographers have spotted a mule in sporty Monte Carlo trim
20 Jan 2021