100% allowance for zero emission goods vehicles

The 100% first year allowance for zero emission goods vehicles covered new, unused electric or hydrogen fuel cell vans and lorries that cannot emit any CO2 when driven. It applied only to expenditure incurred before 1 April 2025 for Corporation Tax and 6 April 2025 for Income Tax, so a van bought in 2026 to 2027 does not qualify; it is relieved instead through the annual investment allowance, full expensing, the 40% first year allowance or the main pool.

Is the allowance still available?

No, not for new purchases. Section 45DA of the Capital Allowances Act 2001 (CAA 2001) gave the allowance for expenditure incurred in a period of 15 years beginning with the relevant date, which section 45DA(3) sets as 1 April 2010 for companies and 6 April 2010 for income tax. HMRC’s Capital Allowances Manual at CA23145 and CA23110 confirms the end dates: expenditure must have been incurred before 1 April 2025 for Corporation Tax or 6 April 2025 for Income Tax. GOV.UK’s capital allowances guidance likewise lists zero emission goods vehicles among the 100% allowances available only for purchases made before April 2025.

That contrasts with zero emission cars. The separate 100% first year allowance for new electric cars under section 45D runs to 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax (CA23153), as explained in capital allowances on cars. The goods vehicle allowance still affects returns for earlier periods, amended claims and later disposals, which is why its conditions are set out below.

Which vehicles qualified?

Under section 45DA(1) and CA23145 the vehicle had to be:

• a goods vehicle, meaning a mechanically propelled road vehicle of a design primarily suited for carrying goods or burden of any description;
• zero emission, meaning it cannot in any circumstances emit CO2 by being driven;
• unused and not second hand; and
• registered, though section 45DA(2) says it does not matter whether first registration came before or after the expenditure. HMRC reads this as needing a number plate.

Battery electric and hydrogen fuel cell vans and lorries qualified. Hybrids did not, whether a range extender or a vehicle that switches between electric and combustion power, because both can emit CO2 when driven. A hydrogen vehicle qualified only if it could not also run directly on a carbon emitting fuel. CA23145 also says vehicles designed to carry passengers, or to do specialist work such as mobile cranes and hoists, are not goods vehicles.

The line between a van and a car can be fine. CA23510 notes that following Payne and others (the Coca Cola case, 2020), a vehicle built for more than one purpose with neither predominating, such as some crew cab or combi vans, is likely to be a car. A car never qualified for this allowance, though a new zero emission car could use the car allowance instead.

Which businesses and costs were excluded?

Section 45DB was written to fit the European Union State aid rules and removes several cases:

• a business that, when the claim is made, is or forms part of an undertaking in difficulty, which HMRC treats as including one whose latest accounts are not prepared on a going concern basis (CA23146);
• an undertaking subject to an outstanding State aid recovery order;
• expenditure for a qualifying activity in the fishery or aquaculture sector;
• expenditure for an activity managing the waste of other undertakings, though a business collecting its own waste is unaffected;
• expenditure to the extent it was met by a relevant grant, which in practice means a State aid. If such a grant arrives after the allowance has been claimed, section 45DB(8) withdraws the allowance and section 45DB(10) allows HMRC to adjust within 3 years of the end of the chargeable period in which the grant was made.

Section 212T capped the allowance at 85 million euros of expenditure per undertaking, including linked and partner enterprises (CA23149). The ordinary first year allowance exclusions in section 46 also applied, so the allowance was not available for vehicles bought for leasing, in the period the trade permanently stopped, or for a van previously owned privately and then brought into the business. More on how grants reduce qualifying cost is in do grants reduce capital allowances.

How was the deadline applied?

Under section 5 CAA 2001, capital expenditure is treated as incurred as soon as there is an unconditional obligation to pay it, which is not necessarily when the order is placed. If payment is not due until more than four months after that obligation arises, section 5(5) treats it as incurred on the due date. A van ordered in early 2025 but not delivered until after 31 March 2025 (companies) or 5 April 2025 (others) therefore missed out.

Spending before a business starts trading is normally treated as incurred on the first day of trading, but CA23110 says that rule is ignored when deciding whether a first year allowance applies. The expenditure must actually have been incurred while the allowance was in force.

What can be claimed on an electric van bought now?

An electric van bought in 2026 to 2027 is not a car, so it can use the general allowances for main rate plant:

• The annual investment allowance of £1 million a year, available to individuals, partnerships of individuals and companies, gives 100% relief for most businesses.
• Companies can claim full expensing on new and unused main rate plant bought from 1 April 2023.
• The 40% first year allowance under section 45U applies to new main rate plant bought on or after 1 January 2026, including by unincorporated businesses, which helps where the AIA is used up or is not available.
• Anything not covered goes into the main pool at a writing down rate of 14%.

For most small businesses buying one or two vans, the AIA gives the same immediate deduction the old allowance did. The difference shows up for mixed partnerships, which cannot claim the AIA, and for large fleet purchases above £1 million by unincorporated businesses.

Can a missed claim still be made?

Sometimes. For Income Tax, CA11130 says a capital allowance claim can be made or amended until the first anniversary of 31 January following the tax year. A claim on a 2024 to 2025 return can therefore still be amended until 31 January 2027. For companies, CA11140 says the limit is 12 months after the filing date for the return, which in most cases means two years after the end of the accounting period. A company whose accounting period ended on 31 March 2025 has until 31 March 2027 in the normal case.

Illustration only. A courier partnership of two individuals bought a new battery electric van for £42,000 on 10 March 2025, and draws up accounts to 5 April each year. The van qualifies under section 45DA and could take a £42,000 first year allowance. If the return had claimed only writing down allowances, amending it within the time limit moves the full cost into that year. Had the van been delivered on 10 April 2025, the 100% allowance would be lost, but the AIA would still give the same result.

What mistakes come up most often?

• Claiming the zero emission goods vehicle allowance for vans delivered after the April 2025 end dates.
• Treating plug in hybrid vans as zero emission.
• Claiming it on a crew cab or combi vehicle that is really a car under the Coca Cola test.
• Forgetting that a grant towards the van reduces the qualifying cost.
• Ignoring the disposal value when the van is later sold: the proceeds go into the main pool and can create a balancing charge.

VAT on buying and running vans is a separate question, covered in VAT on vans and pickups.

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Related Accountapedia entries

• Taking an emergency vehicle home: the tax exemption
• Zero rating exports of goods: evidence
• VAT on electric vehicle charging
• 100% first year allowance for EV chargepoints
• Recording a vehicle part exchange

Sources

• legislation.gov.uk: Act 2001 c. 2, section 45DA
• GOV.UK: Manual page CA23145
• GOV.UK: Manual page CA23110
• GOV.UK: First year allowances
• GOV.UK: Manual page CA23153
• GOV.UK: Manual page CA23510
• legislation.gov.uk: Act 2001 c. 2, section 45DB
• GOV.UK: Manual page CA23146
• legislation.gov.uk: Act 2001 c. 2, section 212T
• GOV.UK: Manual page CA23149

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.