Government consults on emissions-based van tax

Consultation seeks to change VED from current flat rate.

Van operators could be pressured to update to cleaner models by changes to road tax.

The Government has launched a two-month consultation into Vehicle Excise Duty (VED) for vans with a view to reforming the current system. At present all operators of vans under 3.5 tonnes registered since 1st March 2001 (when the VED tax regime for cars was changed to an emissions-based scale) pay a flat annual rate of £250 no matter what the size or emissions level of their vehicle.

According to Government figures, less than one in every 200 new vans purchased in 2016-17 was an ultra-low emission model.

The reforms would see a graduated first-year tax scale introduced, as is the case for cars, with the cleanest vans charged significantly less than those with higher emissions. After the first year owners would pay a flat rate whatever their vehicle, as in the car system.

“The structure of Vehicle Excise Duty for vans and light goods vehicles has not advanced (since 2001), and nor does it contain an environmental signal of any kind,”  the consultation states.

Some observers believe such a scheme should also take into account nitrogen oxides (NOx) particles, which are considered a major air pollutant and have led to much adverse publicity for diesel engines. Older units produce significant NOx emissions but manufacturers argue that more recent units have greatly reduced their NOx output.

No NOx in new bands?

The Government is proposing not to include a NOx factor in its new VED rates due to the difficulty of creating a banded system as is the case for CO2 emissions. “Environmental conditions and van setup play a significant factor in what NOx results will be produced by a test on any given day. Any individual vehicle, therefore, may produce different test results if tested multiple days in a row,”  the consultation states.

“We want to help ‘white van man’ go green,” said environment secretary to the Treasury Robert Jenrick. “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.

Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), has welcomed the consultation, saying that the tax regime is a powerful way of incentivising businesses and individuals to choose low emission vehicles.

However he adds; “This approach is not ideal because it penalises van drivers or their employers for using what is an essential business tool. Some jobs require larger vans with larger engines and larger CO2 emissions.

“We do not want a VED regime that encourages people to use vans with a smaller engine and load capacity, which they then either overload or make extra journeys with.

“We would recommend that the Government uses the tax regime to incentivise people based on air quality performance, so that people are rewarded for operating a Euro 6 van and penalised for driving an older, pre-Euro 5 van.”

Andrew Charman
Andrew Charman
Andrew is the News and Road Test Editor for The Van Expert. He is a member of the Guild of Motoring Writers, and has been testing and writing about new cars and vans for more than 20 years, and attends many new model launches each year.

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