New 'clean' vans could see a reduction in road tax, says Treasury

Hundreds of Ford Transit vans awaiting export at Southampton Docks near the Ford factory in Southampton, where workers have started a four-day week as the company cuts production in response to the economic downturn.

A proposal raised in Chancellor Philip Hammond's spring statement could see rates of Vehicle Excise Duty (VED) lowered for low-emissions commercial vehicles.

The Chancellor said that the Treasury will launch an investigation into reduced VED for the 'cleanest' vans.

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"This government is determined that our generation should leave the natural environment in a better state than we found it, and improve the air we breathe," he said.

"Following the successful intervention to incentivise clean taxis, we will help the great British white van driver go green with a consultation into reduced VED rates for the cleanest vans."

The Treasury has previously said that new diesel vans would be exempt from the tax hikes imposed on other diesel vehicles. From April, buyers of new diesel cars will be forced to pay more for their first year's VED, as all diesels shift up by one price band. The Treasury said this will impact as many as two million new diesel cars, with only those that meet the new Real Driving Emissions limits for nitrogen oxide staying in their band.

The move to incentivise clean vans is welcome and could signal the beginning of a shift away from diesel in this sector. The light commercial vehicle segment is dominated by diesel engines, with a market share of over 98 per cent in January 2018. By contrast, petrol and electric vans made up just 0.7 and 0.8 per cent respectively.

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