Van tax to be cut for green vehicles

Van tax consultation released: tax cuts proposed for greener vans

Murray Scullion Dominic Tobin
May 15, 2018

Van drivers will pay less tax if they buy green, low-emission vehicles under new government proposals.

The cleanest electric vans will be completely exempt from road tax and some hybrid van drivers would see their tax halved.

However, the savings will only apply to the very cleanest vehicles: fewer than 2,000 vans sold last year - 0.4% of the total) would qualify for the largest reductions.

The policy could come into effect as early as this November in an attempt to force white van man to go green and reduce air pollution in urban areas. Road tax, also known as Vehicle Excise Duty (VED) would be slashed from the current annual fee of £250 to £0-£15 in the first year for van drivers making the switch to the cleanest new vehicles.

The proposals would then see tax halved to £125 in subsequent years for efficient plug-in hybrid, which can be charged up and driven on electric power alone. They also have a conventional engine to take over when the batteries run out of power.

Drivers of full electric vans would pay no tax at all. Other van owners would pay a first-year rate of between £25 and £500, depending on their vehicle’s carbon dioxide (CO2) emissions. From then on, they would pay a flat annual rate of £25 - a £5 increase from the current cost.

The government’s figures show that just 1,373 vans sold last year had CO2 emissions of between 0 and 50g/km - a suggested range to classify the greenest vans that would qualify for the cheapest tax rates.

The plans, set out in a consultation document titled Vehicle Excise Duty for vans would only apply to light goods vehicles with a maximum gross weight of 3.5 tonnes. This limit could be extended to 4.25 tonnes to take into account the extra weight of batteries in electric bans.

The Treasury is canvassing the views of van users during the consultation and is expected to announce final plans in this autumn’s budget.

There’s also good news for employees provided with a van by their employers. Under the consultation proposals, people who use zero-emission vans would only pay a proportion of the van benefit charge, currently set at £3,230 for 2017-18.

The consultation states: "This consultation sets out our proposals on how we could reform the van VED system to create these incentives in a fiscally neutral way. It is also designed to gather opinions on the correct way to reform van VED to achieve these objectives. Anyone with an interest in van taxes is encouraged to share their views."

Exchequer Secretary to the Treasury, Robert Jenrick, summed up the proposals. "We’re helping white van drivers to go green by lowering their taxes," he said.

Proposed van tax bands

(subject to consultation responses)

CO2 (g/km) Share of 2016- 2017 van purchases Proposed first year rateProposed standard rate in later years
00.3%£0£0
1-500.0%£0 to £20 (depending on electric range)£125
51-600.0%£25£255
61-700.0%£50£255
71-800.0%£90£255
81-900.6%£105£255
91-1001%£125£255
101-1101.6%£145£255
111-1209.1%£155£255
121-1305.6%£165£255
131-1405.8%£185£255
141-1501.7%£200£255
151-1608.0%£210£255
161-17016.8%£215£255
171-1807.3%£220£255
181-1906.3%£225£255
191-20013.1%£230£255
201-2106.2%£235£255
211-2208.6%£240£255
221-2305.5%£300£255
231-2401.9%£400£255
241-2500.3%£450£255
Over 2500.5%£500£255

 

How to respond to the van tax consultation

Send comments by Friday 20 July 2018 to: ETTAnswers@HMTreasury.gsi.gov.uk 

Read the full consultation here

                   

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