In general, the tax position for vans is already more favourable than the position for cars, so tax will not necessary be the main driver, and employers will need to weigh up a range of factors when making a decision on their next van purchase.

Tax position

Electric van purchases will quality for 100% first year allowances until March 2025 which means that full tax relief can be received upfront, in the year of purchase. However, vans already qualify for the Annual Investment Allowance - and indeed for some companies, a van purchase might be eligible for the enhanced super-deduction which provides additional tax relief on qualifying assets until 31 March 2023. So it may be that the existing allowances and temporary enhanced reliefs are more relevant to a business than the specific, time-limited, relief for electric vans.

Since 1 April 2021, there has been zero benefit in kind for electric vans where the vehicle is used privately by an employee. However, the benefit in kind regime for vans is already fairly generous, so the switch to electric may not create any savings unless the employee has significant private use of the vehicle. This is because limited private use of a van (which includes home to work travel) does not create a benefit in kind even for a non-electric van.

Reputation

In the last couple of years a few large businesses, including Sky and BT, have started to move some of their van fleet to either all-electric, or hybrid vehicles as part of their commitments to reducing or eliminating their carbon footprint. Electric vans, duly branded with the business logo, are a very visible statement of a business’s commitment to going green. 

Grants and incentives

One disadvantage is that electric vans can be more expensive than non-electric vehicles. There are some grants available to reduce upfront costs but the level of the grant available will depend on the price of the vehicle and the size of it.

Running costs

While the upfront cost is greater, there can be savings on ongoing running costs. There are various aspects to running costs – maintenance, fuel and Vehicle Excise Duty – and all should be cheaper for an electric van. With fewer moving parts, electric vehicles can be more cost effective for maintenance and the ‘fuel’ cost of electricity per mile travelled is currently much less than the cost of diesel or petrol.

Congestion zones

Businesses who are making frequent deliveries in congestion zones may – depending on the terms of their nearest zone – be able to reduce or eliminate their congestion charge costs by switching to an all-electric, zero emissions vehicle. But business owners should check the zones relevant to them carefully, as it may be that this changes as more vehicles become electric. For example, the ‘Cleaner Vehicle Discount’ (previously the Ultra Low Emission Discount (ULED)) for London’s congestion charge currently allows electric vehicles to register and enter the zone without charge. However, it is due to be removed from 25 December 2025, so current savings will not last forever.

Range anxiety

Many people have concerns over running out of charge and managing both the recharging process and finding a recharging point. Since recharging overnight, rather than in working hours, is likely to be less disruptive, any business considering a change will need to look at the typical daily mileage of their fleet carefully. Both Sky and BT started by switching the lower mileage vehicles in their fleet, and other businesses, regardless of size, may want to do likewise.

Cold weather can also have an impact on the maximum range of the vehicle as cold batteries work less effectively and significant loads will also reduce range capacity.