On 15th May government launched a consultation proposing changes to the Vehicle Excise Duty system for N1 light goods vehicles to try and create an environmental incentive to purchase newer, cleaner vans.
Currently van operators pay a flat rate each year and operators of new vans pay the same amount as those with older vehicles. The new system will be based on the CO2 emissions of the vehicle and would replicate the car system.
The consultation included proposals to introduce a first year rate for new vans that emit less than 226g/km of CO2 that will be lower than the current standard rate (£250 as of 1st April this year). Then after the first year, all new vans would be placed on the same standard annual rate.
There would be a further distinction in the standard rate for vans that are zero or ultra-low emission capable, the same as the distinction for hybrid cars.
Lastly, there would be a small increase to the current standard rate to cover the reforms; e.g. the standard rate would increase from £250 to £255 to cover the lower rates for cleaner vehicles.

The consultation concluded in October 2018, and the key decisions that the government has taken are to:

  • further develop its understanding of the impacts of WLTP (Worldwide harmonized light vehicles test procedure) on CO2 emissions for vans, ahead of announcing the new rates and bands, for introduction from April 2021
  • ensure the new system takes into account the weight of the van by introducing a 2-category approach
  • provide ongoing incentives, beyond the first-year, for new zero emission, ultra-low emission and other alternatively fuelled vans from April 2021

Click here for further details on this outcome