Green vans to get tax boost

The government is looking at ways to incentivised users of vans to go green. According to the statistics, less than one in every two hundred vans (0.4%) bought in 2016/17 was an ultra-low emission model.

To tackle this issue, the government is seeking views on reforms to vehicle excise duty, currently charged at a flat rate of £250 for all vans, to make it more affordable to buy greener models.

In a related matter, the reduced duty rate for red diesel – believed to be holding back the use of cleaner fuels by non-road vehicles and machinery in towns and cities (for example cranes or generators used on construction sites) – is also under the reform microscope.

Red diesel, which accounts for 15% of all diesel consumption in the UK, currently benefits from a reduced rate of 11.14p per litre compared to the standard charge of 57.95p.

A government spokesman is quoted as saying:

“We want to help ‘white van man’ go green. We appreciate that buying a new van is a major investment for small businessmen and women and want to help make environmentally friendly choices more affordable.”

It will explore creating a graduated first year rate for vans, as is already in place for cars. Most van purchases would pay less tax in the first year as a result of the change.

These proposed changes are part of wider proposals to improve air quality in our towns and cities.

For example, red diesel contributes to air pollution by producing nitrogen dioxide, a toxic gas that inflames the lining of the lungs. It is particularly harmful for the most vulnerable in our society, such as children with asthma living in urban areas where it is used by non-road vehicles and machinery.

The reduced rate of duty for red diesel costs around £2.4 billion a year in revenue compared to if duty was charged at the main rate. Red diesel for agricultural use, fishing vessels, home-heating and other static generators, will be out of scope.

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