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Van tax legislation may change by 2018

  • Government eyes new emissions-based tax system for vans
  • Successful car tax system could provide solution for vans
  • Manufacturers supportive but acknowledge there are challenges

Following the SMMT’s recommendation that LCV Vehicle Exercise Duty (VED) should be reformed, industry leaders are adamant that alterations are now inevitable.

At the launch of the all new Mitsubishi L200, Mitsubishi UK managing director said he expects the van tax changes to happen “before 2018”.

Mitsubishi Outlander plugin

Success with car tax

The European Union has been encouraging UK authorities to reduce greenhouse gases for decades, and the emission tax for cars, introduced in 2001, has helped curb tailpipe emissions.

Further incentives, like the ‘free’ road tax for low emission vehicles (less than 100g/km), has witnessed sales of plug-in vehicles increased fourfold to 14,498 in 2014 to the highest in Europe.

Nissan eNV200

However for vans, it remained the same flat rate of £230 for vehicles with an engine size of 1,549cc or more, and £145 for engines less than 1,549cc. Under the proposals, this will change to a scheme similar to that of cars; however, there is an obvious disadvantage for the larger vans.

Unsuitable for LCVs

“When considering reforms to the LCV market, additional considerations are needed with respect to the usage of vans. A graduated VED system structured in the same way as the current system for cars in the UK would lead to those vans with low load capacities attracting the lowest rates and the largest vans attracting the highest rates”, the report states.

Renault Kangoo ZE

Opponents argue that this could lead some van buyers to choose vans too small for their operations, and having to make two trips instead of one which leads to increased running costs and emissions. This key issue was highlighted in the report.

Unique Solution

“Many van users may require the full capacity offered by the largest vans in order to sustain business needs. From an environmental perspective, it is optimal for users to make single trips in the correctly sized (albeit larger, more CO2 emitting vans) than having to make multiple trips in smaller vans.

As a result, a graduated VED system for LCVs should be based upon CO2 emissions per tonne of loading capacity in order to control for the impact of vehicle size on emissions”.

Manufacturer response

The response from the manufacturers has been positive. All European LCV manufacturers have been focussing on the upcoming Euro-6 legislation, so emissions have been a top priority.

Ford, for example, is developing an all-new 2-litre engine for the Ford Ranger, Ford Transit Custom and Ford Transit, with fuel efficiency and emissions playing the biggest roles.

Dagenham to build low emission engine

“Mitsubishi has been working hard over the past decade to reduce the carbon footprint of its vehicles, so we welcome the changes”, explains Lance Bradley, Managing Director of Mitsubishi Motors UK.

“Our new 2015 Mitsubishi L200 has the lowest emissions in its class, and we launched the very first plugin 4x4 commercial, the Mitsubishi Outlander PHEV, last year. Our products are very well placed for the proposals”.

Mitsubishi L200 engine

Summary

Obviously, large changes to van tax are going to have a huge effect on buying characteristics, with more buyers choosing cleaner vans.

However, this doesn’t necessarily mean lower powered vans; many higher output van nowadays, like the Vauxhall Vivaro Bi-Turbo (119bhp), are cleaner and more efficient than entry level models, so this legislation is unlikely to be a killjoy.