Calculate depreciation for any UK business van using straight-line or reducing balance methods. Includes HMRC capital allowance projections with AIA, WDA and the 2026 van benefit charge. Updated with real UK van market depreciation rates by size and model.
Depreciation is the largest running cost for most UK business vans — and understanding it unlocks both better financial planning and significant tax savings.
Commercial vans are the backbone of UK trade, delivery and service businesses — and they are subject to depreciation from the moment they leave the forecourt. On average, a new UK van loses 20–30% of its value in the first year and around 50–60% over the first three years. After year one, the rate of decline typically slows to 15–20% per year, then 10–15% from years four to five, and gradually plateaus from year six onwards. The size of the van matters: large panel vans depreciate fastest (30–35% in year one), while small vans and electric vans can perform significantly better.
For UK business owners, understanding van depreciation matters for two distinct reasons. First, it affects the book value of your business assets and the depreciation charge in your profit and loss account under UK GAAP (FRS 102). Second, and crucially different from cars, vans can benefit from the Annual Investment Allowance (AIA) — giving 100% tax relief on the purchase cost up to £1,000,000 in the year of purchase. This makes buying a business van one of the most tax-efficient capital expenditure decisions available to UK sole traders, partnerships and limited companies in 2026.
Electric vans are increasingly competitive on depreciation too. According to Cap HPI data, electric vans retain around 52% of their value after three years and 60,000 miles — compared to just 43% for diesel vans over the same period. When combined with zero van benefit charge and lower running costs, electric vans represent a compelling choice for UK businesses in 2026.
Three tabs — accounting depreciation schedule, reducing balance real-world value, and HMRC capital allowance projection for business vans.
Vans are treated far more favourably than cars for UK business tax purposes. Here is exactly how.
The most important tax fact for UK business owners in 2026 is that vans are not cars under HMRC rules. A van classified as a commercial vehicle (HMRC defines this as a vehicle primarily constructed to carry goods, with a payload over 1 tonne) can claim the Annual Investment Allowance (AIA) up to £1,000,000 — giving 100% tax relief in the year of purchase. In contrast, cars (including most SUVs) are explicitly excluded from AIA. This means a sole trader or limited company buying a £35,000 transit van can deduct the entire £35,000 from taxable profits in year one, saving up to £8,750 in Corporation Tax at 25%.
From 1 January 2026, companies can alternatively claim the new 40% First-Year Allowance (FYA) on qualifying main rate pool expenditure, providing 40% relief on the van cost in year one with the balance entering the main pool at 14% WDA from year two. Zero-emission electric vans continue to qualify for a separate 100% First-Year Allowance under the enhanced capital allowances scheme, with no cap on cost. The combination of low benefit-in-kind charges and generous capital allowances makes zero-emission vans the most tax-efficient commercial vehicle choice in 2026.
Note that for employee benefit purposes, a company van attracts a flat-rate van benefit charge of £4,170 for 2026/27 (up from the 2025/26 level). This is much simpler — and often lower — than the complex emissions-based Benefit-in-Kind charge applied to company cars. Zero-emission vans attract zero van benefit charge in 2026/27, and the van fuel benefit charge (if fuel is provided) is a flat £798. Always confirm the vehicle's classification — a double-cab pick-up truck with payload under one tonne may be reclassified as a car from April 2025.
Real-world depreciation estimates for the most popular UK vans — by size, type and model.
| Van Model | Approx. New Price | Year 1 Depreciation | 3-Year Depreciation | Value Retained (3 Yrs) | Category |
|---|---|---|---|---|---|
| Ford Transit (Large) | ~£36,000 | ~30% | ~57% | ~43% | Large Van |
| Mercedes Sprinter | ~£42,000 | ~28% | ~55% | ~45% | Large Van |
| Volkswagen Crafter | ~£40,000 | ~27% | ~53% | ~47% | Large Van |
| Ford Transit Custom | ~£33,000 | ~25% | ~50% | ~50% | Medium Van |
| Volkswagen Transporter | ~£38,000 | ~20% | ~45% | ~55% | Medium Van |
| Vauxhall Vivaro | ~£30,000 | ~27% | ~55% | ~45% | Medium Van |
| Ford Ranger (Pick-Up) | ~£37,000 | ~18% | ~38% | ~62% | Pick-Up Truck |
| Vauxhall Combo / Renault Kangoo | ~£22,000 | ~22% | ~48% | ~52% | Small Van |
| Citroen Berlingo | ~£22,000 | ~25% | ~52% | ~48% | Small Van |
| Ford E-Transit (Electric) | ~£55,000 | ~18% | ~45% | ~55% | Electric Large Van |
| Vauxhall Vivaro-e (Electric) | ~£40,000 | ~17% | ~43% | ~57% | Electric Medium Van |
| UK Van Average (Diesel) | — | ~25% | ~57% | ~43% | All Diesel Vans |
| UK Van Average (Electric) | — | ~18% | ~48% | ~52% | All Electric Vans |
Sources: LoadsOfVans UK, Cap HPI, Motorway UK (2025–2026 data). Figures are market averages — actual depreciation varies by mileage, condition, service history and specification.
All the key HMRC rates for business vans updated for 2026/27 — capital allowances, van benefit charge and fuel benefit.
Vans qualify for AIA up to £1,000,000 — 100% of the purchase cost deducted from profits in year of purchase. Not available for cars/SUVs. Most UK businesses should use AIA as first choice.
Available from 1 January 2026 for companies on main rate pool expenditure. Allows 40% relief in year one with balance entering the main pool at 14% WDA from year two.
Main pool Writing Down Allowance reduced from 18% → 14% from 1 April 2026. Applies to vans not claimed under AIA or FYA. Slower relief than AIA — use AIA if possible.
100% First-Year Allowance available for zero-emission commercial vehicles. No monetary cap. Available to companies and unincorporated businesses. Applies to fully electric vans only.
Flat-rate benefit charge increased to £4,170 for 2026/27 where a company van is available for private use. Zero-emission vans: £0. Much simpler and often lower than company car BIK.
Flat-rate fuel benefit charge rises to £798 for 2026/27 where a business pays for private fuel in a company van. Zero for electric vans. Applies on top of the van benefit charge if fuel is provided.
Follow these four steps to generate your full UK van depreciation schedule or HMRC capital allowance projection.
Select Straight-Line for your annual P&L accounting charge, Reducing Balance to estimate real-world value loss over time, or HMRC Capital Allowances for your tax return planning.
Input your van's purchase price, estimated residual value, ownership period and van type. For HMRC tab, select the appropriate capital allowance type — most businesses should choose AIA first.
Instantly produce a full year-by-year depreciation schedule showing annual charge, accumulated depreciation, net book value and estimated HMRC tax saving where applicable.
Compare the HMRC capital allowance result against the benchmark table to understand your van's real-world value vs its book value, and plan disposal timing for maximum tax efficiency.
Three different approaches to measuring UK van depreciation — choosing the right one for your purpose.
Related UK depreciation tools and official HMRC guidance for business van owners and fleet managers.
Common questions about UK van depreciation and HMRC capital allowances for business vans in 2026.