Nicolson, Chartered Accountants

49/50 Bayhead, Stornoway, Isle of Lewis HS1 2DZ

Is it a car? Is it a van?

 The rules for taxation of cars and vans have been set for some time, but with the merger of Customs and the Inland Revenue, they have been clarified in an attempt to bring more vehicles within the charge to tax, and to reduce the number of vehicles where input VAT can be recovered.

The rules are complex for some vehicles, so what follows is a general summary of the position.

All vehicles are cars, unless:

• They have a payload of over 1 tonne

• There is seating in the load area, which does not affect the predominant use of the vehicle as being for the carriage of goods

• They are clearly vans e.g. have no rear seats, metal side panels to the rear of the front seats, a load area which is unsuitable for carrying passengers.

The problem clearly arises with "car derived" vehicles, such as crew cab pick-ups.  With a payload of less than 1 tonne they are cars and liable to punitive taxation; above that and they are vans, and have a benefit in kind of £500 per annum.  All VAT on the purchase of a van can be recovered.  No VAT can be recovered on the purchase of a car.

Customs are developing a list of qualifying car-derived vans.  Unfortunately, this is not yet available, and the latest guidance is here.