Van tax to be cut for green vehicles

Van tax consultation released: tax cuts proposed for greener vans

Murray Scullion Dominic Tobin
Oct 30, 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 is likely to come into effect as of April 2021, in an attempt to force white van man to go green and reduce air pollution in urban areas. The government’s long-term ambition is for 40% of new van sales to be ultra low emissions by 2030.

Road tax, also known as Vehicle Excise Duty (VED) would be slashed from the current annual fee of £250 to £0-£10 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 vans, which can be charged up and driven on electric power alone, while fully electric vans would be tax-free. 

Other van owners would pay a first-year rate of between £100 and £2000, depending on their vehicle’s carbon dioxide (CO2) emissions. From then on, they would pay a flat annual rate of £265.

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 originally only applied to light goods vehicles with a maximum gross weight of 3.5 tonnes. The respondents to this document suggested incorporating the weight and/or body type of the van too. So the latest government proposals incorporate ‘large’ vans as well, however, the exact weights for each category will be set out before April 2021.

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 40% of the van benefit charge, currently set at £3,230 for 2017-18.

Proposed van tax bands

(The exact weight categories, banding, and rates will be set out by the government ahead of April 2021.) 

Weight category

CO2 (g/km) emissions

Proposed first year rate

Proposed standard rate in later years

A) Small/medium sized vans

0

£0

£0

1-50

£10

£125

51-75

£100

£265

76-90

£150

£265

91-100

£190

£265

101-110

£230

£255

111-130

£270

265

131-150

£310

£265

151-170

£500

£265

171-190

£1000

£265

191-225

£1500

£265

Over 225

£2000

£265

B) Large vans

0

£0

£0

1-50

£10

£125

51-75

£100

£265

76-100

£150

£265

101-130

£190

£255

131-160

£270

265

161-190

£310

£265

191-220

£350

£265

221-225

£390

£265

Over 225

£500

£265

     

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