The Government has given some early details on its forthcoming reform of the Vehicle Excise Duty system for vans, including confirming that zero-emission vans will be given a £0 standard rate and there’ll an ongoing discount for ultra low emission and other alternatively fuelled vans.

The Government said the new scheme will distinguish between zero and low-emission vans

It follows a consultation announced in the spring statement and carried out between 15 May and 20 July 2018 on reforms intended to incentivise van drivers purchasing a new van to make the cleanest choices – in line with the Government’s ‘ambition’ in the Road to Zero Strategy for 40% of new van sales to be ultra low emission by 2030 – while remaining fiscally neutral.

Responses to the consultation have now been published, with the Government having received 20 formal responses to the consultation from two individuals and 18 interested organisations, including manufacturers Ford, Vauxhall and Nissan, fleets including Royal Mail and the SMMT, IAM Roadsmart and FTA.

Full details of how the scheme will work are yet to be announced; the Government has said it’s looking into precise details, including further developing its understanding of the impacts of WLTP on CO2 emissions for vans, ahead of announcing full details of the scheme for introduction from April 2021. Bands and rates will be set out ahead of Finance Bill 2019-20.

However, the summary of responses does say that “the Government recognises that van drivers should not be penalised for using an essential business tool”. As such, it will introduce a two-category approach to ensure the new system takes into account the weight of the van, heeding comments from the majority of respondents which agreed the system should do this. An indicative two-category approach is given in the document but, as above, the exact weight categories, CO2 banding and rates will be announced ahead of introduction in April 2021, once the impact of WLTP has been fully assessed.

The Government also said it would maintain a differential between zero-emission vans and those which emit some CO2; again in line with comments from the majority of respondents.

The summary of responses also shows that almost all respondents were supportive of the government reviewing the current VED system for vans, which is set at a flat rate per year for most van drivers (currently £250), and found there was broad support for the principle of introducing a CO2 based system. In particular, it was recognised that consumers understand this approach. Respondents also said that VED should be paid based on CO2 beyond the first year to provide a stronger ongoing incentive, given the higher list prices for ultra low emission vans.

To read the summary of responses, click here.