Is it a car or van?
Buying or leasing a commercial vehicle (e.g. a van) attracts more generous tax deductions for the business than acquiring a car. The vehicle’s driver will also pay far less tax if he is driving a company van rather than a company car for private journeys.
The difference between a van and a car for Income Tax purposes is that a van is constructed primarily for the conveyance of goods. Broadly, if the vehicle is not primarily designed to carry goods, it’s a car.
Some combi-vans have a row of seats behind the driver, so they are equally suited to carrying either people (on the extra seats) or goods. The Court of Appeal has recently decided that such vehicles must be treated as cars, and not as vans, for taxing the benefit for the driver.
If your business already owns a combi-van, you should review the P11D returns submitted for the driver for the tax years 2018/19 onwards, as a correction may be necessary. We can help you with that.
As the definition of a car for capital allowance claims is almost identical to that for employment taxes, you also need to review any capital allowance claims you have made for any combivans in the last two years.
The definition of a van for VAT purposes is slightly different, as it depends on whether the vehicle can carry a payload of at least one tonne. You can reclaim the VAT charged on acquiring a van, but not on the purchase of cars, with the exception of taxis.
If you are thinking of buying a new van for the business, check the tax position with us first, as just because it looks like a van doesn’t mean it isn’t a car!
