The Government recently launched a consultation into proposed changes to the way vehicle excise duty (VED) for vans is calculated.
Van VED is currently set at a rate of £250, without taking into account the type of vehicle. The Government are now proposing a similar scheme to cars, whereby the amount of VED is calculated based on the emissions of the van. This is to encourage drivers into choosing cleaner vans. Electric vans are currently exempt from VED just like electric cars.
The Treasury claim that most van purchases would pay less tax in the first year if they were to implement a graduated first year road tax rate, as in the case for cars. After the first year, most vans would continue to pay a standard rate set in line with the current flat rate, set at £255 for 2019 – hybrid vans would attract a discounted rate of £125, whilst electric vans would remain exempt from paying VED.
The Treasury also invited views on proposed changes to van benefit-in-kind. This may involve replacing the current system of calculating the Van Benefit Charge and Van Fuel Benefit Charge with a new system based on CO2. This would replace the current flat taxable value that applies to all vans, currently set at £3,350 for the Van Benefit charge.
The consultation closed on the 20th July and any changes can be expected in the Autumn Budget.