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Cautious welcome to road tax changes for vans

Posted on 16 May 2018

Revisions to the way vans are taxed are being given a cautious welcome by the Chamber, but with a caveat that Government must not use any change to introduce higher business costs by stealth.

The Treasury launched a consultation yesterday (Tue) asking van users and other interested groups how Vehicle Excise Duty on vans should be applied in the future.

The objective of the review is to “incentivise van drivers to make the cleanest choices” when choosing new vehicles.

It is suggesting a scheme similar to that introduced for private cars last year, where essentially there is a flat rate of annual VED but drivers buying more-polluting vehicles pay more in the first year.

Vans weighing under 3,500kg are currently charged a flat-rate VED of £250 a year. In its examples of how the new scheme might work, the Government has shown this increasing to £255 a year.

The review also proposes changes to the ‘benefit in kind’ taxation of vans where vans are allowed to be driven for personal use over and above to and from work.

As with older cars, the Government’s notes say the Treasury would be looking to make any revision to van VED “fiscally neutral”.

Under the proposals outlined, the new VED rates would apply only to new vans bought after the date set for the changes. Owners of existing vehicles would continue to pay as now.

Scott Knowles, Chief Executive at the Chamber, said: “At first glance, the consultation appears to do exactly what the Government intends, ie, to incentivise fleet and individual operators to buy the most environmentally-friendly vehicles possible. That is something the Chamber welcomes.

“But we will be watching carefully to make sure that the proposals don’t penalise the operators of older vehicles who might not be in a position to upgrade their vehicles and take advantage of any incentives available under the scheme.

“We will also be monitoring Government and local authority proposals for meeting clean-air targets for towns and cities across the region, especially as Government itself will be guilty of contributing to dirty air by forcing the continued use of diesel trains throughout the East Midlands due to the non-electrification of the Midland Main Line.

“Not for the first time, we would urge Government to use this opportunity to practice cohesive transport policy so that all elements work together towards a common goal – something that has been sadly lacking to date.”

The Chamber will continue to encourage the adoption of sustainable business practices, including the uptake of Ultra-Low Emissions Vehicles whenever possible and for industry to work with the region’s universities to develop and enhance these technologies.

To take part in the consultation, visit https://bit.ly/2IjtXWK. It is expected that the results of the consultation, which runs until 20 July 2018, will define policies to be announced in the Budget in the autumn.

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