While electric vans currently make up a small percentage of total vehicle sales, people and businesses’ concerns about pollution, cost savings, and carbon footprint reduction in the UK are driving a surge in interest and production in electric cars and vans.
Moreover, COP26 policies are requiring countries like the United Kingdom to produce exclusively zero-emission cars by 2035 which will encourage companies to produce more electric vehicles faster, particularly in large cities where the most stringent emission controls are in place, such as London and Oxford where the London Ultra Low Emission Zone (ULEZ) and Oxford’s ZEZ have been implemented respectively.
Bearing this in mind, many businesses are considering purchasing an electric van. However, it is important to consider the advantages and needs of an electric van against a gasoline-powered van.
Among some of the advantages that can be found are the cost of the electricity price compared to the fuel price, the government grants or the benefit in kind charges.
Government Grants
If you are considering purchasing an electric van there are government grants available, as the plug-in van grant. But you will need to meet the following requirements depending on the size of the vehicle.
You can claim a total of 1000 plug-in van and truck grants for your business or organisation each year. This limit resets every year on 1 April. Of course, it will not be applied to the same vehicle. Grants will be given only to certain vans depending on weight and CO2 emissions per mileage and divided into small vans and large vans, which you can find in the UK.
Your van will be considered a qualifying small van if it has a gross vehicle weight of less than 2,500kg, it emits fewer than 50 grams of CO2 per kilometre and is capable of travelling 100 kilometres without emitting any emissions. A grant for a small van will be a maximum of £2,500 and will cover up to 30% of the cost of the purchased vehicle.
Your van will be considered a qualifying large van if it has a gross weight of between 2,500kg and 4,250kg, it emits fewer than 50 grams of CO2 per kilometre and can drive 100 kilometres without emitting any emissions. The grant for a large van will be a maximum of £5,000 and will cover up to a maximum of 35% of the cost of the vehicle.
Lower Running Costs
According to the most recent Ofgem Energy Price Cap for April 2022, an electric van typically costs 6p per mile based on a flat rate, giving £6 for every 100 miles travelled. This represents a significant reduction in the cost per mile for electric vehicles.
Fuel expenses are projected to be 14p per mile (based on circumstances previous to Russia’s oil embargo), which equates to £14 for every 100 miles driven, making it obvious that electric vans have substantially cheaper operating costs.
However, depending on the size of the battery and the speed of the charging station, the charging time for electric vans can range from 30 minutes to over 12 hours, which could be a disadvantage when it comes to time.
Electric Van Vehicle Excise Duty (VED)
VED for automobiles is based on CO2 emissions measured at the emission. Simply, the more a car pollutes, the more it is charged; electric cars are free from road tax, while hybrid and internal combustion models are taxed on a sliding scale based on emissions.
However, the regulation differs significantly for electric vans, generally known as light commercial vehicles (LCVs). Instead of a progressive rate, LCVs are paid a flat amount based on the date your van was initially registered. An electric van is a light commercial vehicle having a maximum gross vehicle weight (GVW) of 3,500kg.
New internal-combustion-powered vehicles must pay £275 in annual road tax, whereas those registered between 1 March 2003 and 31 December 2006 must pay £140. The same £140 fee also applies to petrol, diesel or hybrid vans registered between 1 January 2009 and 31 December 2010.
On the plus side, electric vans are zero-rated for VED purposes. The government has provided the same incentives to van owners as it does to car buyers to become green, so yearly road tax for all fully electric, zero-emissions vans is £0.
It is important to clarify that the rebate only applies to fully electric vehicles. Hybrid and plug-in hybrid vans continue to be subject to the yearly £275 fee, and the exemption for electric vans is unlikely to persist forever, given that they account for a growing proportion of vehicles on the road.
Capital Allowances
If your company purchases a zero CO2 electric van, this one will be entitled to a 100% allowance in the first year till April 2025. Otherwise, vans must be treated as plant and machinery and allocated to the main pool, where allowances can be written off at 18%, unless an annual investment allowance, super allowance or enhanced capital allowance is claimed.
In addition, until April 2023, any business that pays for the installation of an electric charging point will be entitled to 100% tax relief in the first year, but any business that incurs the expense of installing an electric charging point between 1 April 2021 and 31 March 2023 can claim Super Deduction – which means that for every £1 invested, the business will get 25p in tax bill relief.
It should also be noted that in the UK there are currently over 5000 free charging points located throughout the country.
Benefit in Kind charges
Depending on the amount of CO2 the electric van produces per mile the benefit in kind for this year is 0%.
A tax charge for benefits in kind may apply if an employee may use a business van privately. The exemption is if the van qualifies as a collective vehicle (essentially, one utilised by multiple employees but not frequently taken home by any of them at night) or if private usage is confined to the travel between home and work, with no additional private use.
When choosing between switching from a fuel-powered van to an electric one, one will have to make the decision that is best suited to the type of business one is doing. However, it is important to bear in mind that, in the long run, not only will you end up helping climate change, but also the costs will be reduced in comparison.
For help to correctly declare buying an electric van through your company and reporting the right amount of taxes due, you can contact an accountant using the form below you can find out more about company tax return service and payroll services.
New and used electric cars and vans
For those of you who are ready to buy a pure electric vehicle, you’ve come to the right place! We’re constantly adding new and used electric cars and vans to our stock list. At the moment, we have some fantastic brand new Vauxhall Vivaro-e vans. Plus, the all time favourite Tesla Model S!
You can find us in Strood, Kent but we do offer virtual viewings and offer UK delivery. For more information, don’t hesitate to contact us on 01634 914 063.
* All information correct as of 31/08/2022.
