As fuel prices and availability uncertainty continue, we have seen a rise in electric vans and bikes, especially in the courier sector. Battery and hybrid electric vehicles (EVs) now make up more than half of all new vehicles sold.
The ability to enhance energy efficiency is a massive bonus for companies that spend hundreds on fuel per week delivering packages.
Some benefits of EVs include:
- Increased efficiency
- Lower running costs
- Cheaper maintenance costs
Businesses operating in big cities such as London can also benefit. This is because fully electric cars are exempt from the London Congestion Charge and are compliant to drive in the Ultra-Low Emissions Zones (ULEZ). These zones are in the process of being introduced into many more cities around the UK. And, unlike the Congestion Charge which is only in place for 15 hours per day, ULEZ charges apply 24/7, 365 days a year.
If you want to know more reasons why you should buy an electric van, check out our Top reasons why you should buy an electric van article!
And with that, let’s get into some of the savings and tax benefits owning an electric vehicle can get you today…
Can I get a grant for an electric van?
Before you even purchase your new shiny electric vehicle, discounts on the price are already available to save you money.
The government introduced a plug-in vehicle grant for 8 categories of vehicles, including small vans and big vans, providing that the vehicle emits 75g/km of CO2 or less and is capable of zero-emissions travel.
For smaller vans, the grant can pay up to 35% of the purchase price up to a maximum of £2,500. Whereas for bigger vans, the grant can cover up to 35% of the purchase price up to £5,000. However, it is always important to check with the car manufacturer to see if your vehicle falls under the grant requirements.
Businesses can in fact claim up to a total of 1000 plug-in van grants each year, with the limit resetting every year on April 1st.
Can I claim a charging point grant for an electric van?
The government also provides grants for domestic electric vehicle charging points. These are for people who either own or lease an electric vehicle, providing that it is supplied and installed by a UK government OLEV-approved chargepoint supplier.
The government has set up the Workplace Charging Scheme (WCS) , a voucher-based scheme for businesses for electric vehicle charger installation. The grant covers up to 75% of the cost to the maximum of £350 for each socket, for up to 40 sockets.
Forget the days of having to remember to go to the petrol station…
Do electric vans really save money?
While the upfront cost is usually a little pricier in comparison to their petrol or diesel fuelled counterparts, in the long run, electric vans do save money.
On average, an electric van costs 2-3p per mile to run. In comparison, a standard diesel fuelled van costs on average 10p per mile. As a result, choosing an electric option will impact outgoing costs significantly.
In terms of maintenance, electric vans are far less prone to wear and tear on the roads, unlike traditional fuel alternatives. Electric vans also have fewer moving parts with no clutch or oil to replace, reducing maintenance expenses in the present and future.
What is the road tax (VED) on an electric van?
For fully electric vans there is no road tax. Fully electric vans which produce 0g/km of CO2 are currently exempt. This is an incentive for those drivers who choose the cleanest, most environmentally-friendly vehicles.
Capital allowances for an electric van
If you’re thinking that electric vans may be the way forward for your business, you’ll be pleased to know that as of April 2021, the first-year allowance covers 100% of the cost that can be claimed back on new and unused vans with zero emissions.
This means companies can set the full cost of any electric van against the taxable profits in the first year of purchase, creating a saving of 19% corporation tax in 2022.
However, from now until 31st March 2023, businesses can benefit from a ‘super’ deduction, offering a 130% first-year allowance on qualifying electric cars and vehicles. To benefit from this allowance, businesses must charge their vehicles/vans at the charging point located at the business.
Tax free Mileage
When an employee uses their own electric car or van for business purposes, the company can pay the normal tax-free mileage allowance to the individual at 45p per mile for the first 10,000 (driven in the first year).
Additional miles on top of the 10,000, can be reimbursed at 25p per mile also.
Electric van Benefit in Kind tax (BIK)
One thing to bear in mind with a company vehicle is the company car tax (BIK tax), which is dependent on the variant of the vehicle. This tax comes into effect when the company vehicle is issued for private use. But be aware that for normal combustion engines cars and vans this can change and BIK taxes will be deducted from the employees’ pay.
If the vehicle is used for business purposes only or you are self-employed, you would not need to pay company car tax.
In recent times the BIK rate for electric vans was reduced to zero, to match that of an electric car, to further incentivise people to jump to electric.
Will you make the switch to an electric van?
So, there you have it. Switching to electric vans, in the long run, can ultimately save businesses a fair bit of cash.
There are multiple savings and tax benefits to introducing electric vans to your business. But with regulations changing as more electric vehicles come into wider use, it’s best to check which grants and taxes you are eligible for before you commit.
If you want to know more or have any other questions or queries about electric vans, or you’re thinking about introducing electric vans into your company, check out the FAQs on our Electric Van & Electric Commercial Vehicle Insurance page.
Interested in making the jump to an electric van? Make sure to let us know in the comments!