Buyers of plug-in vans will be able to receive a grant up to the lower of 20% of the list price or £8000, the Transport Minister Norman Baker and Business Minister Mark Prisk announced today. This is an extension of the Plug-In Car Grant which offers 25% - up to £5000 – to motorists buying a new plug-in car. Ministers have also re-confirmed there is funding secured for this grant until 2015. The purpose of the consumer grant is to enable the purchase of ultra-low carbon vehicles which could otherwise have been unaffordable.

Transport Minister Norman Baker said: “Electric vehicles are the arrowhead for a low carbon revolution in motoring and as more models come to market we’ll begin to see sales gather pace. “Car buyers have had a year to take advantage of our grant and now it’s time for van buyers to get their chance to go electric. This is great news for businesses given the lower running costs of these vehicles – fleet buyers tell us that this is one of the most important factor influencing their decision on what to buy.

“It is radical initiatives like these which will allow us to create a transport system that both cuts carbon and is an engine for economic growth.”

Business Minister Mark Prisk said: "Supporting ultra-low carbon technology in vans makes sense. An upfront purchase grant, when combined with lower running costs and tax benefits, can make switching to an ultra-low carbon van an attractive choice for businesses. “The technology also fits well with a large portion of the van market that rely on short urban trips to and from base.”

From today ultra-low carbon van manufacturers will be able to apply to be part of the Plug-In Van Grant - which will help to improve local air quality in cities, reduce carbon emissions and meet Government carbon reduction targets.

To be eligible for the scheme, vans will have to meet performance criteria to ensure safety, range, and ultra-low tailpipe emissions. Consumers, both business and private will receive the discount at the point of purchase.

There are currently 10 cars eligible for the Plug-In Car Grant – 5 of which came onto the market in 2011, with the other half expected to be available to purchase this year. During the first year of the scheme, over 1000 eligible vehicles were registered and, up to 31 December 2011, 892 applications were made for the Plug-In Car Grant.

Comment The above DfT press release does not go into detail to explain the 20% calculation but, on the basis of a telephone call it will apply to the full list price including VAT. A purchaser who can reclaim VAT would then effectively get a grant which works out at 24% of the net capital cost. This then comes close to the 25% grant which can be claimed on plug-in cars.The maximum capped limit of £8,000 is less likely to come into play than for cars because the cap is £3,000 higher.