New tax scheme threatens van market and businesses

Businesses are facing the possibility of higher costs if the Government start imposing CO² emission taxes on vans. Some vans will be emission taxed as much as a high performance sports car and a change in tax policy will cause an unheaval in the new and used van market similiar to that seen in the car sector over the last 12 months. If so, many van fleets will be faced by additional costs which could easily amount to over £1000 a year for every vehicle.
With mounting pressure to reduce van CO2 emissions in line with cars and the intention on the part of the European Commission set standards by the end of the year, there is the increasing possibility that UK van VED will be rated on a CO2 emissions basis. Fleets of large panel vans will be among the worst hit. The majority of large panel vans like the popular Ford Transit 2.4 Tdci LWB (*above*) fall into the 226g/km-255g/km CO2 category - the same as exotic cars including the Porsche Boxster 3.4S. The financial consequence would be that a 12-month Road Fund License would increase from today's fee of £180 to £415 in 2009-10 and £430 in 2010-11, with no guarantee that rates will remain at these levels. In addition, any van bought new in 2010-11 would be subject to the one-off first-year fee of £750 in place of the £430. In comparison with today, a van within the 226-255g/km band supplied in 2010-11 would therefore be subject to an increase in VED costs of £570 in the first year, and at least £1320 over a four-year cycle. That equates to £50,000 in additional costs for any fleet with 37 or more vehicles. Failure to plan for this could cause significant cashflow problems at a time when businesses are already financially stretched, yet CO2 emissions data is not officially or generally available to users - even though manufacturers are now obliged to provide the data to the government. "Without any confirmation of future policy, van fleet operators must at least ensure that their fleet strategy reduces their CO2 emissions to a minimum," says Head of Lombard Vehicle Management, Rob Bailey. "We have therefore taken a lead and have ensured that we are able to provide indicative CO2 data for the majority of vans. While this cannot be absolutely definitive, as the information is necessarily sourced from European specifications which may differ slightly from those of UK models, it is fundamentally accurate and also offers an invaluable CO2 comparison between different models. "And when combined with the accompanying fuel economy figures our customers can see pence-per-mile and whole-life costs, which are becoming more and more vital as the economic outlook becomes more challenging.
"One result of the need to plan more carefully around the fiscal consequences of vehicle choice and CO2 output is that fleets may opt for smaller vehicles. There will be significant differences in VED liability between essentially similar vehicles. For example, some car-derived vans like the PSA Nemo (*right*) have a slightly lower capacity than SWB vans but produce CO2 emssions low enough to qualify for a VED liability of only £35 per annum. As long as the vehicle is fit for purpose, the time may have come for fleets to seriously consider downsizing."

Alistair Darling says it is vital to provide funds to small businesses and plans to unveil a £4bn package of support for British firms. The chancellor says the funding from the European Investment Bank will be made available to small and medium sized firms through High Street banks after traditional lending by the banks dried up due to the credit crisis. Mr Darling said he was "concerned" about instances where healthy businesses were being refused funding.