Bonjour Chris !

In terms of meaning, "on y va" and "allons-y" are used very similarly.
However, "on y va" is in Le Présent Indicatif, which means it's a simple, declarative sentence: "We're going". This sentence CAN be emphasised with an exclamation mark "On y va !" -> "We're going!", expressing excitement, and in some cases be translated as "Let's go!").
As for "Allons-y !", it is in L'Impératif Présent, which expresses commands and advice, and is the literal translation of "Let's go!".

Here, we were specifically expecting the use of L'Impératif. Thanks to your question, we've now added a hint to remove any anbiguity ;)

I hope that's helpful!
À bientôt !