As a business, did you know that your choice in vehicles can make a significant impact on tax, especially when choosing between a van or car? Not only will you see a difference in the tax relief given but also the tax payable by the driver who uses the vehicle for private journies.
How Does The Tax Position Differ?
When discussing the two cases mentioned above, the legal terms state that ‘a vehicle of a construction primarily suited for the conveyance of goods or burden’ will be in a more favourable position – in other words, vans.
In some instances, your business may use a combi-van, which will be treated as a car for employee benefits purposes because it has a row of seats behind the driver, which can be used for both people and goods. If your business already owns a combi-van, then we would highly recommend reviewing the P11D returns submitted from 2018-19 onwards. This is something that our team can assist you with, so please do not hesitate to get in touch for support.
The definition of a car for capital allowance is incredibly similar to those for employment taxes, which means that you should also consider reviewing your capital allowance claims for any combi-vans. Luckily, as the definition of a van for VAT purposed depends on whether the vehicle holds more than a tonne, you are able to reclaim the VAT charged on acquiring a van. You will not need to reclaim on the purchase of cars, with the exception of taxis.
With the above in mind, if you are considering investing in a van, it is strongly advised to check the tax position with us first as it may be classed as a car.