Vehicle tax change proposed to help White Van Man go green
Ministers are considering scrapping the current flat rate of vehicle tax for vans to encourage owners to buy more environmentally friendly vehicles to combat pollution.
The Treasury has opened a consultation on varying the £250 vehicle excise duty to boost sales of low-emission work vans.
It is looking to introduce a "graduated first year rate" system like that for cars, where the first 12 months' duty amount depends on the vehicle's emission levels.
The Treasury said fewer than one in every 200 vans (0.4%) bought in 2016/17 was an ultra-low emission model which is powered by electricity, hydrogen or a hybrid engine.
In contrast, 75% of those purchased in the same period was a mainly diesel or petrol-powered machine that emitted more than 150g/km of CO2.
Exchequer Secretary to the Treasury, Robert Jenrick, said: "We want to be the first government to leave the environment in a better state that we found it.
"One of the ways we can do this is by using the tax system to help drivers afford greener choices.
"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."
The Treasury also announced a call for evidence into whether "red diesel" should continue to be taxed at a lower rate for use in towns and cities, amid concerns over its role in pollution.
The lower tax rate, which the Treasury says costs £2.4 billion annually in lost revenue, is already the subject of a consultation into its use and distribution.
Red diesel is already subject to an investigation into how it is used over fears it is being utilised for purposes it is not meant for in urban areas.
It is supposed to be used in non-road vehicles like tractors, and agricultural and industrial machinery, and is taxed 11.14 pence per litre less than regular fuel.
The latest call for evidence will exclude use by agriculture and in fishing vessels, the Treasury said.
Mr Jenrick added: "Public health is at risk due to the use of red diesel in towns and cities. So we are looking at how we can level the playing field on red diesel and exploring how we can encourage users to ditch it."