Company Vehicles

Listed Under: Blog

When is a van not a van? 
When it’s turned into a side road.........


Having a company van instead of a company car can be tax efficient, with low benefit in kind rates on private usage, VAT reclaimable on the purchase and subsequent running costs, and annual investment allowance on the purchase price.


However certain types of vehicle blur the HMRC drawn lines between car and van and it becomes difficult to know whether the car rules or van rules apply.  These vehicles include double cab pickups (such as the VW Amarok) and car derived vans (such as the Land Rover Discovery van).  Here’s a summary of the rules:


For VAT purposes it will be a car if:

-it is of a kind normally used on public roads, and

-which has three or more wheels, and either:

-is constructed or adapted for carrying passengers, or

-has roofed and windowed accommodation behind the driver,

But excluding:

-vehicles capable of accommodating only one person,

-vehicles with a gross weight of at least three tonnes,

-vehicles with a payload of at least one tonne,

-minibuses (for 12 or more people),

-caravans, ambulances, prison vans and other special purpose vehicles.

Benefit in kind/capital allowances

For benefit in kind and capital allowance purposes it will be a car if it is a mechanically propelled road vehicle, which is not:

-a goods vehicle (of a construction primarily suited to the conveyance of goods or burden of any description*),
-a motorcycle (fewer than four wheels and an unladen weight of no more than 425Kg),
-an invalid carriage (specifically designed for disabled use and an unladen weight of no more than 254Kg), or
-a vehicle of a type not commonly used as a private vehicle and unsuitable for such use.

*For the purposes of the above definition your partner, children or parents are not deemed a burden by HMRC, contrary to how you may perceive them from time to time.

So where does this leave us with the double cab pickups and car derived vans? 

Most double cab pickups are listed as a specific exception in the VAT definition of a car by virtue of their payload exceeding 1 tonne (check with the manufacturer before buying) and are a goods vehicle for benefit in kind and capital allowances.  So these are deemed commercial vehicles for these taxes.

Where a car derived van is offered as an official model by the manufacturer in the UK then it will likely have been engineered to meet the HMRC guidelines, so it will have the rear seats and mounting points removed, rear seat belt mounting points removed, a bulk head fitted behind the front seats, a flat load area covering up the rear footwells and the rear windows replaced by panels or designed so as to not let light or air into the vehicle.  Assuming that these criteria are met then the vehicle will be deemed a commercial vehicle.

If you’re considering buying a commercial vehicle and unsure of the tax treatment then we’re here to help.